Role of Reserve Bank of India
in Government Accounting
Role of RBI
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Session Overview
• Reserve Bank of India is the banker of the
Government.
• Union Government and all State
Governments, except the Government of
Jammu and Kashmir and Government of
Sikkim have entered into an agreement
with the bank for conducting Government
Business;
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RTI Jammu
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Session Overview
• The banking business of Government is
conducted under the Reserve Bank of India, Act
1934 and as per the orders/instructions given to
the bank by Union Government;
• At places where the Reserve Bank does not
have its branch, State Bank of India performs
the function on behalf of the former;
• Reserve Bank of India holds the cash balances
of the Government;
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Session Overview
• Central Accounts Section of the Reserve
Bank of India at Nagpur keeps a complete
account of Governments transactions;
• Inter-Government transactions are also
affected by the Reserve Bank of India on
the advice of designated authorities.
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Session Overview
• In this session we will discuss:
• The role of Reserve Bank of India in
Government Accounting;
• Inter Government and inter departmental
adjustments;
• Checks and balances in the Accountants
General Office.
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RTI Jammu
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Learning Objective
• At the end of the session, the learner will
be able to state the role of Reserve Bank
of India in Government Accounts,
adjustment of Inter Government
Transactions, and adjustment of the
outstanding suspense balances under final
heads.
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RTI Jammu
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Role of Reserve Bank of India
• Banking business of Government like:
• Receipt of moneys on behalf of the
Government;
• Holding of cash balances;
• Ways and means advances to the
Governments to tide over temporary
liquidity problems;
• Investment of surplus cash as per
directions of the Government.
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Role of Reserve Bank of India
• The Union Government and all the State
Governments (except the Government of
Jammu and Kashmir and Government of
Sikkim) have entered into an agreement
with the RBI to conduct their banking
business;
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RTI Jammu
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Role of Reserve Bank of India
• Ministries and Departments of Central
Government shall operate on such
offices/branches of the Reserve Bank or of
the bank as have been or may be
nominated for handling the receipt and
payment transactions of the particular
ministry or departments.
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RTI Jammu
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Role of Reserve Bank of India
• The Transactions of Railway, Posts,
Telecommunications and Defence
Department arising at RBI and SBI, acting
as an agent of RBI, shall be distinguished
from the Central Transactions in the initial
accounts and classified separately.
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RTI Jammu
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Role of Reserve Bank of India
• Similarly, each office or branch of the RBI
or the SBI acting as an agent of the RBI,
shall keep a separate accounts of cash
transactions undertaken by it on behalf of
the State Government within whose area it
is situated.
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RTI Jammu
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Role of Reserve Bank of India
• Statement of these transactions together
with all supporting vouchers, challans,
paid cheques etc. is forwarded by each
office and branch of the RBI daily to
concerned PAOs, Railways, Defence,
Post, Telecommunication Department,
Treasury Officers. These transactions are
also reported to the CAS of the RBI,
Nagpur daily through designated link
offices.
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Account of the Central
Government with the Bank
• Ministries and Departments of the Central
Government shall, as a rule, operate on
such offices and branches of the Reserve
Bank and or of a designated scheduled
bank, as have been, or may be nominated
for handling the receipt and payment
transactions of the particular Ministry or
Department.
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RTI Jammu
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Maintenance and submission of
Accounts
• Each office or branch of the RBI or bank
handling transactions of the
Ministries/Departments of the Central
Government shall maintain separate accounts in
respect or each Ministry and Department
banking with it and render an account of the
transactions to the PAO of the concerned
Ministry and, or Department, at such intervals as
may be prescribed by the Government, together
with all the supporting challans, paid cheques.
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RTI Jammu
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Maintenance and submission of
Accounts
• These transactions shall also be routed through
the banking channel prescribed by the RBI, to
facilitate their incorporation in the books of the
RBI, CAS, at Nagpur, which is responsible for
keeping a complete account, of receipt and
payments (including inter-Governmental
adjustments and adjustments inter-se of
Defence, Railways and Posts- other than
Telecommunications) on account of the Central
Government.
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Statement of Closing Balances
• A statement of the closing balance of the Central
Government shall be sent each month, by the
CAS of the RBI to the Controller General of
Accounts, indicating:
• (i) Central Government Account Balance (in
respect of Central transactions and Union
Territory Administrations dealt with by
Accountants General and of all Union Territory
Governments with Legislature)
• (ii) Railway Fund Balance;
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Statement of Closing Balances
•
•
•
•
(iii) Postal Account balance;
(iv) Telecommunication Account Balance;
(v) Defence Account Balance;
(vi)Departmentalized Ministries’ Account
Balance (which also includes transactions
of Union Territories of Delhi and Andaman
and Nicobar Islands whose accounts have
been separated)
• (vii)
Total
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Monthly statements
• The CAS of RBI shall maintain individual
accounts of various Central Government
Ministries, Departments and of Union
Territory Administrations having separated
accounts offices, and send a monthly
statement to their Principal Accounts
Offices with such supporting details as
may be prescribed by the RBI in
consultation with the Controller General of
Accounts:
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Accounts of State Governments
with the Bank
• Each State Government has made a
separate agreement with the RBI by virtue
of which the General banking business of
that Government is carried on and
transacted by the Reserve Bank. The
operations of each State shall, however,
be confined to the offices and branches of
the RBI and of the bank which have been
designated as falling within the area of that
particular State.
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Accounts of State Governments
with the Bank
• The receipt and payment of moneys on
behalf of a State outside its jurisdiction
shall ordinarily be arranged through the
Accountant General of the State in which
the transactions take place.
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RTI Jammu
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Maintenance of Accounts of
Central and State Government
• Complete accounts of the Central Government
and of each of the State Government with the
Bank shall be maintained by the CAS at Nagpur
of RBI which shall also act as a General clearing
house for the adjustment of (i) all transactions
between different State Governments and (ii)
such transactions between the Central and State
governments as may be specified by the Central
Government.
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Inter-Govt. Adjustments
•
•
Inter Government adjustments are
necessitated due to:
Central Government pays share of State
Governments in Income Tax and Central
Excise Duties and other taxes collected
by the Central Government for State
Governments;
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RTI Jammu
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Inter-Govt. Adjustments
•
•
•
Grants-in-aid as per recommendations of
the Finance Commission as approved by
the Parliament;
Loans given by the Central Government
to the State Governments;
Reimbursement of expenditure on
Central Schemes or Centrally Sponsored
Schemes executed through State
Governments.
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Inter-Govt. Adjustments
• Similarly State Governments make
repayments of Central Government loans,
payments of interest on Government of
India’s loan and cost of goods purchased
through D.G.S & D to Central
Government.
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Inter-Govt. Adjustments
• CAS of RBI, Nagpur after carrying out all
adjustments occurring during the month
and incorporating the transactions
reported by the branches and agency
banks compiles the total transactions for
the month of that account circle and sends
monthly closing statements of Central
Government/State Government on 20th of
the following month with following details: Role of RBI
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Inter-Govt. Adjustments
• Opening Balance
• Transactions during the month (Net of
Receipts and disbursements)
• Adjustments in R.B.I.
• Closing Balance.
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Procedure of Adjustments
• There are two procedures which are
adopted in dealing with inter government
transactions: • Reserve Bank of India Advice
Procedure
• Cash Settlement Procedure
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R.B.I Advice Procedure
• The Reserve Bank of India Advice procedure is
adopted in the following cases in the Civil
Accountants General Offices:
• Accounts of Inter State Suspense i.e.
transactions between states inter-se;
• Repayment of loans taken by State Government
from the Central Government and payment of
interest thereon by the State Governments to the
Central Government/Ministries/ Departments;
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R.B.I Advice Procedure
• The Special cases of pensions of retired High
Court Judges paid through state treasuries or
Public Sector Banks, which are under certain
constitutional obligations/ provisions required to
be charged on the Consolidated Fund of India
pending recovery of equivalent amounts from
the State Government;
• Transactions connected with Reserve Bank of
India Remittances occurring in State nonbanking treasuries/sub-treasuries; and
• .
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R.B.I Advice Procedure
• Such other cases as may be specially
prescribed by the President on the advice of the
Comptroller and Auditor General.
• All transactions adjustable between State
Governments inter-se and between a State
Government and Central Government covered
by RBI Advice procedure shall be initially
brought to account in the State Section of
account under the head ‘Inter State Suspense’
or under ‘Adjusting Account between Central
and State Government’ respectively.
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Separate transactions
• The transactions of Railway, Posts,
Telecommunications and Defence Department
arising at offices and branches of the RBI and
SBI, acting as agent of the RBI, shall be
distinguished from other Central transactions in
the initial accounts and classified separately for
each Railways, each circle of Posts, each
Accounts Officer of Telecommunication, and
each Controller of Defence Accounts
respectively.
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Separate transactions
• These transactions will be taken against
the Railway Fund, Postal Account,
Telecommunication Account and Defence
Account respectively, in the books of the
Reserve Bank.
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RTI Jammu
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Reserve Bank Suspense- Central
Accounts Office
• This minor head is meant to be operated upon
by Principal Accounts Office etc. for issuing
advice on Reserve Bank of India, Central
Accounts Section, Nagpur to effect transfer from
the balances of Central Government (Civil) to
that of State Governments (Except Jammu and
Kashmir and Sikkim Governments) in connection
with payment of loans, grant-in-aid, State
Governments share of Income Tax and Union
Excise Duties etc. so as to afford debit to the
final head of account in their books by per contra
credit to this suspense minor head.
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RBI Remittances
• Transactions related to the issue and payment of
telegraphic transfers, drafts (including transactions
relating to security deposit interest draft and dividend
warrant payment credits issued by the Reserve Bank of
India). On the Reserve Bank Account are accounted for
under the Major Head 8782-Cash Remittances and
Adjustments between officers rendering accounts to
same Accounts Officer-105 Reserve Bank of India
Remittances.
• These transactions are cleared with the Reserve Bank
by corresponding adjustment against the balances of the
Governments concerned.
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Monthly statements
• in respect of (i) above to the concerned
Accountant General (with break up of
balances/transactions relating to Central
Government and relating to relevant Union
Territory Administrations) and Accounts
offices of Union Territory Governments;
and in respect of (ii), (iii), (vi), (v) above, to
the Railway Board, Postal Board,
Telecommunications Board and controller
General of Defence accounts respectively.
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Inter-State Governments
Adjustments
• All inter-State adjustments as well as all
payments which one of these
Governments has to make to another shall
be advised by the Accountant General
authorized in this behalf to the CAS of the
RBI which will pass the necessary entries
in the accounts of the Governments
concerned, maintained in its books.
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Other adjustments
• Similarly, such adjustments in the case of
specified transactions between the Central
Government and the State Governments
as well as transactions between Defence,
Posts, Telecommunications and Railways
inter se will be advised to the CAS of the
RBI by the authorized Accountant General
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Statement of monthly closing
balances
• At the close of the accounts of each
month, a statement of closing balance of
each State Government in the books of
the Bank after taking into accounts all
cash transactions in all the offices,
branches and agencies of the Bank and
the adjusting transactions in its own books
shall be forwarded by the Central
Accounts Section to the Accounts Officer
concerned.
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Statement of monthly closing
balances
• Similarly, a statement of the closing
balance of the Central Government
comprising: • (i) Central Government Account Balance
(in respect of Central transactions of
Accounts Officers and separated accounts
of Union Territories only).
• (ii) Railway Fund Balance.
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Statement of monthly closing
balances
•
•
•
•
(iii) Postal Account Balance.
(iv) Telecommunication Account Balance.
(v) Defence Account Balance.
(vi) Departmentalized Ministries Account
Balance
• (vii) Total
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Flow Receipts
RBI
CAS Nagpur
Link Cell at Nagpur
One
certified DMS
Non Cheque
Drawing Officer
Tax Payer
Cash
Cheque or Bank
Draft
Receipt
Accredited Bank
Branch
Focal
Scroll in Duplicate point
Branch
Cheque
Drawing officer
Cash Cheque
One copy of
Accredited Branch
Bank
Receipt Scroll
(1)
main scroll
Duplicate with
Challan
Put through
Principal Accounts Officer (tallies
both and clears PSB suspense)
(2)
Certified one
main Scroll
(3)
DMS
in Four
Copies
(4)
Certified DMS
in Duplicate
PAO
Certified DMS one Copy
Enters Put through Details plus DMS
PSB Register and RBD Register
Note
Role of RBI
(i) DMS Date wise monthly statement
(ii) some system for payment also
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Flow Data for DMS Transactions
DDO1
DDO2
DDO3
Daily scroll one copy
Branch 1
Daily scroll one copy
Branch 2
Daily scroll one copy
Branch 3
Challans/ Cheques 2
Scrolls
2 copies of master scroll challan/ cheques with
copies of
PAO
Original Branch scroll certified main Scroll
Focal Point Branch
4 copies of DMS
Daily Memo
plus certificate
of reporting to
PAO
Certified 2 copies of DMS
Principal
PAO
Certified DMS
Link Cell
PAO Wise –Date Wise Month
Statement
Daily Memo
plus certificate
of reporting
Daily
Statement
Duplicate
Verified daily
Statement
3 copies PAO
-Wise / Date
wise
Statement
PAO wise Date wise Monthly
Statement
RBI CAS
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