RBI’S ROLE AS BANKER TO GOVERNMENT.

1. What is RBI's role with regard to conduct of Government's banking transaction?

In terms of Section 20 of the RBI Act 1934, RBI has the obligation to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union. Further, as per Section 21 of the said Act, RBI has the right to transact Government business of the Union in India.

State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the Act. As of now, such agreements exist between RBI and all the State Governments except with the Govts of Jammu and Kashmir and Sikkim.

2. How does Reserve Bank of India discharges it's statutory obligation of being 'Banker to Government'?

Reserve Bank of India maintains the Principal Accounts of Central as well as State Government's at its Central Accounts Section, Nagpur. It has put in place a well structured arrangement for revenue collection as well as payments on behalf of Government across the country. A network comprising the Public Account Departments of RBI and branches of Agency Banks appointed under Section 45 of the RBI Act carry out the Govt. transactions. At present all the public sector banks and private sector banks viz. ICICI Bank Ltd., HDFC Bank Ltd.and UTI Bank Ltd. act as RBI's agents. Only authorised branches of Agency banks can conduct Govt. business.

3. How payment into Government account is made?

All monies for credit to Government account like taxes or other remittances can be made by filling the prescribed challans of the Government/Department concerned. These challans along with the requisite amount (by way of cash, cheque or DD) are required to be tendered with the authorised bank branches.

4. When is the receipted challan for payment made into Government Account made available?

The receipted challans in case of cash tender are generally handed over to the remitter immediately across the counter. In case of payments made by cheque/DD, the receipted challan is issued only on realization of the instruments based on the clearing cycle of the local Clearing House. In all such cases, a temporary paper token is issued to the depositor indicating the date on which the receipted challan will be ready for delivery. The receipted challan will have to be collected within 15 days from the date indicated on the paper token.

5. What if the paper token is misplaced/lost?

In case of loss of original token, on a specific request and on payment of prescribed fees, the receipted challan is issued.

6. What if the Receipted Challan is misplaced?

No duplicate challan is issued under any circumstances. Instead, a 'Certificate of Credit' is issued on specific request with the requisite particulars and payment of prescribed fee.

7. What is the remedy if the cheque issued by Government is misplaced or lost in transit?

The payee of the cheque has to approach the cheque issuing authority and apply for a duplicate cheque explaining the circumstances under which the original cheque was lost or misplaced. After satisfying himself, the drawer may issue a letter to the payee bank requesting it to record STOP payment against the lost cheque. The bank thereafter checks whether the cheque is already paid. If not paid, it records 'STOP PAYMENT' order till the expiry of the validity of the cheque and a 'NON PAYMENT CERTIFICATE' is issued.

8. Are Agency banks compensated for conduct of Central/State Government business?

The accredited banks are paid remuneration by RBI for conduct of State/Central Government transactions. Such remuneration is called Agency Commission. The rates of agency commission applicable at present (from 1.7.2005) are as under:

1.Receipts Rs.45 per transaction
2. Payments other than pension 9 Paise per Rs.100/- turnover
3. Pension Payment Rs.60 per transaction

(Compiled by Sreekumar P, Manager TRAINING – STC, TVM)