1. Role of RBIRTI Jammu1 Role of Reserve Bank of India in Government Accounting

2. Role of RBIRTI Jammu2 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;

3. Role of RBIRTI Jammu3 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;

4. Role of RBIRTI Jammu4 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.

5. Role of RBIRTI Jammu5 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.

6. Role of RBIRTI Jammu6 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.

7. Role of RBIRTI Jammu7 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.

8. Role of RBIRTI Jammu8 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;

9. Role of RBIRTI Jammu9 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.

10. Role of RBIRTI Jammu10 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.

11. Role of RBIRTI Jammu11 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.

12. Role of RBIRTI Jammu12 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.

13. Role of RBIRTI Jammu13 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.

14. Role of RBIRTI Jammu14 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.

15. Role of RBIRTI Jammu15 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.

16. Role of RBIRTI Jammu16 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;

17. Role of RBIRTI Jammu17 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

18. Role of RBIRTI Jammu18 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:

19. Role of RBIRTI Jammu19 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.

20. Role of RBIRTI Jammu20 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.

21. Role of RBIRTI Jammu21 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.

22. Role of RBIRTI Jammu22 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;

23. Role of RBIRTI Jammu23 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.

24. Role of RBIRTI Jammu24 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.

25. Role of RBIRTI Jammu25 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: -

26. Role of RBIRTI Jammu26 Inter-Govt. Adjustments Opening Balance Transactions during the month (Net of Receipts and disbursements) Adjustments in R.B.I. Closing Balance.

27. Role of RBIRTI Jammu27 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

28. Role of RBIRTI Jammu28 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;

29. Role of RBIRTI Jammu29 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 non- banking treasuries/sub-treasuries; and.

30. Role of RBIRTI Jammu30 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.

31. Role of RBIRTI Jammu31 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.

32. Role of RBIRTI Jammu32 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.

33. Role of RBIRTI Jammu33 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.

34. Role of RBIRTI Jammu34 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.

35. Role of RBIRTI Jammu35 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.

36. Role of RBIRTI Jammu36 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.

37. Role of RBIRTI Jammu37 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

38. Role of RBIRTI Jammu38 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.

39. Role of RBIRTI Jammu39 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.

40. Role of RBIRTI Jammu40 Statement of monthly closing balances (iii) Postal Account Balance. (iv) Telecommunication Account Balance. (v) Defence Account Balance. (vi) Departmentalized Ministries Account Balance (vii) Total

41. Role of RBIRTI Jammu41 Flow Receipts RBI CAS Nagpur Link Cell at Nagpur Focal point Branch Accredited Bank Branch Non Cheque Drawing Officer Tax Payer Cheque Drawing officer Accredited Branch Bank Principal Accounts Officer (tallies both and clears PSB suspense) PAO PSB Register and RBD Register One certified DMS Receipt Scroll in Duplicate Cash Cheque or Bank Draft Cash Cheque One copy of Receipt Scroll Put through Certified DMS one Copy Enters Put through Details plus DMS (1) main scroll Duplicate with Challan (2) Certified one main Scroll (3) DMS in Four Copies (4) Certified DMS in Duplicate Note (i) DMS Date wise monthly statement (ii) some system for payment also

42. Role of RBIRTI Jammu42 Flow Data for DMS Transactions DDO1DDO2DDO3 Branch 1 Branch 2Branch 3 Focal Point Branch Challans/ Cheques 2 copies of Scrolls 2 copies of master scroll challan/ cheques with Original Branch scroll certified main Scroll 4 copies of DMS Certified 2 copies of DMS PAO Principal PAO Link Cell RBI CAS Daily scroll one copy Daily Statement Duplicate Verified daily Statement 3 copies PAO -Wise / Date wise Statement PAO Wise –Date Wise Month Statement PAO wise Date wise Monthly Statement Daily Memo plus certificate of reporting to PAO Certified DMS Daily Memo plus certificate of reporting Daily scroll one copy