Agreements of the Central Government with the Reserve Bank
The Central Government has entered into an agreement with the Reserve Bank of India by
virtue of which the general banking business of the Government (in which business is
included the receipt, collection, payment and remittance of moneys on behalf of the
Government) is carried on and transacted by the Reserve Bank in accordance with and
subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and
also in accordance with and subject to such orders as may, from time to time be given to the
Reserve Bank by the Central Government.
Account of the Central Government with the Bank
(1) Ministries and Departments of the Central Government shall, as a rule, operate on such
offices and branches of the Reserve Bank and or of the bank, as have been, or may be
nominated for handling the receipt and payment transactions of the particular Ministry or
Department.
(2) Each office or branch of the Reserve Bank or bank handling transactions of the
Ministries, Departments of the Central Government shall maintain separate accounts in
respect of each Ministry and Department banking with it and render an account of the
transactions to the Pay and Accounts Officer 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. These transactions shall also be routed through the banking channel
prescribed by the Reserve Bank of India, to facilitate their incorporation in the books of the
Reserve Bank of India, Central Accounts Section, 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.
(3) The transactions of Railways, Posts, Telecommunications and Defence Department
arising at offices and branches of the Reserve Bank and State Bank of India, acting as agent
of the Reserve Bank 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. These
transactions will be taken against the Railway Fund, Postal Account, Telecommunication
Account and Defence Account respectively, in the books of the Reserve Bank. Each office
and branch of the Reserve Bank entrusted with the work shall furnish to Accounts Officer
concerned of the Railways, Postal, Telecommunications and Defence Department, as the
case may be, daily scrolls relating to the transactions pertaining to each, together with the
requisite challans, paid cheques.
A statement of the closing balance of the Central Government shall be sent each
month, by the Central Accounts Section of the Reserve Bank to the Controller General of
Accounts, indicating:-
(i) Central Government Account Balance (in respect of Union Territory Administrations
dealt with by Accountants General and of all Union Territory Governments with
Legislature)
(ii) Railway Fund Balance
(iii) Postal Account Balance
(iv) Telecommunication Account Balance
(v) Defence Account Balance
(vi) Departmentalised Ministries’ Account Balance (which also includes transactions of
Union Territories of Delhi and Andaman and Nicobar Islands whose accounts have been
separated)
(vii) Total
The Central Accounts Section of Reserve Bank 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 Reserve Bank in consultation with
the Controller General of Accounts; in respect of (i) above to the concerned Accountants
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), (iv), (v) above, to the Railway Board, Postal Board,
Telecommunications Board and Controller General of Defence Accounts respectively.
Article wise explanation:
Article 7.
The Central Government and the State Governments have separate
Consolidated Funds of their own, entitled the Consolidated Fund of India’ and ‘the
Consolidated Fund of the State’, respectively, into which the revenues received by the
Central (including union territories) State Governments, loans raised by that Government
by the issue of treasury bills, loans or ways and means advances, and moneys received by
that Government in repayment of loans are credited, and from which the expenditure of
that Government when so authorized by the appropriate Legislature is met. The Central
Government and the State Governments have also separate Public Account entitled ‘the
Public Account of India’ and ‘the Public Account of the State’, respectively, into which
all other public moneys received by or on behalf of the Central (including union
territories)/State Governments are credited and from which disbursements are made in
accordance with the prescribed rules. The procedure to be followed for the payment into
and the withdrawal, transfer or disbursement of moneys from, the Consolidated Fund and
the Public Account and for the custody of moneys standing in that Fund and account is
regulated by law made by the appropriate Legislature and pending such registration, by
the rules made by the President or the Governor of the State, as the case may be, under
Article 283 of the Constitution. The President and the Governors of the States have
authorized under this Article the continuance of the rules in force before the
commencement of the relevant provisions of the Constitution. These rules include
provisions to secure that all public moneys received on account of the Central
Government or of the State shall, with such exceptions as may be specified in them, be
paid into the Consolidated Fund or the Public Account of India of the State concerned, as
the case may be.
Article 7-A.
The Central Government and each State Government have or may have a separate Contingency Fund, entitled ‘the Contingency Fund of India’ and ‘the
Contingency Fund of the State’, respectively. The Fund will be at the disposal of the
President or the Governor of the State to enable advances to be made by him for meeting
unforeseen expenditure, pending authorization of such expenditure by Parliament or the
State Legislature under appropriations made by law. The procedure to be followed for the
custody of, payment of moneys into and the withdrawal of moneys from such Fund is
regulated by law made by the appropriate Legislature and pending such legislation by the
rules made by the President or the Governor of the State.
Note :—Though the transactions of the Railway Department form part of the
Consolidated Fund, the Contingency Fund and the Public Account of India, they are
nevertheless taken against the Railway Fund which has been created proforma in the
books of the Reserve Bank of India.
Article 8.
Save as may be specifically provided in any case, cash balances in the
separate ‘Consolidated Funds or Contingency Funds and Public Accounts of India and
States’ are either held in a Government treasury or kept with the Bank.
Course Purchase Query 