Principal Accounts Office
Government of NCT of Delhi

Reserve Bank Suspense - Central Accounts Office

4.1    Ministries/Departments of the Central Government arrange payment of loans and grants-in-aid as well as payment of their share of income tax, union excise duty etc. to the State Governments through the Central Accounts Section of the Reserve Bank of India, Nagpur. Except in case of Jammu & Kashmir and Sikkim, these transactions are carried out by book adjustment by the RBI, CAS, Nagpur instead of by exchange of cheques/bank drafts for the following reasons:-

(i) The amount of loans or grants payable to State Governments are very huge running into several crores of rupees at a time.

(ii) The loans and grants so payable have to reach the books of the State Governments within the minimum possible time and at times on a stipulated date so as to enable them to make full utilisation of such moneys immediately on receipt

(iii) In a number of cases the ways and means position of the State Governments would be adversely effected in case the loans or grants are not paid on the stipulated date.

In order, therefore, to avoid any delay in passing of actual credit for the loans and grants payable to all the State Governments, these are passed through the Central Accounts Section of the Reserve Bank of India, Nagpur which maintains the ledger accounts of the Central Ministries/Departments as also the State Governments. For this purpose, a minor head '110-Reserve Bank Suspense-Central Accounts Office' under the Major Head '8658-Suspense Accounts' is operated.

4.2 Payment of Loans/Grants-in-aid to State Governments (other than Jammu & Kashmir and Sikkim).

4.2.1 The Ministry/Department of the Central Government issues an expenditure sanction addressed to the Principal Accounts Office of that Ministry/Department indicating the amount of loan/grant payable to the State Government concerned and the bead of account upto sub-head level under which such payment is to be debited. A copy of this sanction is also endorsed to the Finance Department of the State Government concerned and the Accountant General or the Chief Accounting Authority of the Slate, in cases where the accounts have been departmentalised or separated from audit.

4.2.2  On receipt of the sanction, the Principal Accounts Office examines whether necessary budget provision exists under the heads of account indicated in the sanction, namely:

'3601' for payment of Grants-in-aid to the State Governments; and

'7601' for payment of loans and advances to the State Governments.

If it is in order, an advice is sent to the Central Accounts Section of the Reserve Bank of India, Nagpur to debit the Central balances for the amounts shown in the advice and afford credit in the books of the State Governments concerned. Simultaneously, the Principal Accounts Office will pass the following entry in its books:-

Dr. '3601/7601' as the case may be upto sub-head level as indicated in the sanction letter.

Cr. 8658-Suspense Accounts
110-Reserve Bank Suspense-Central Accounts Office.

4.2.3 On receipt of advice from the Principal Accounts Office of the Ministry/Department, the Reserve Bank of India, Central Accounts Section, Nagpur credits the balances of the concerned State Government by debit to the account of the Ministry/Department of the Central Government. Copies of the clearance memoranda, are sent by the RBI to the concerned Accountant General/Chief Accounting Authority of the State. The transaction is also included by the RBI, CAS, Nagpur in the monthly statement of accounts rendered to the Principal Accounts Office of the Ministry/Department.

4.2.4 On receipt of such a statement from the Reserve Bank of India, the Principal Accounts Office prepares a Transfer Entry as under:-

(-) Cr.8658-Suspense Accounts
110-Reserve Bank Suspense - 
Central Accounts Office

To

8675-Deposits with Reserve Bank
101-Central-Civil Cr.

(Transfer Entry prepared on receipt of the clearance memo/monthly statement of account from Reserve Bank of India, CAS Nagpur against No. ....................... dt. ....................). With the preparation of Transfer Entry as above, the original credit under the head 'Reserve Bank Suspense-CAO' gets nullified by a minus credit.

4.3  Repayment of Loan and payment of interest thereon by the State Government.

4.3.1 At the time of repayment of loan and payment of interest thereon to the concerned Ministry/Department of the Central Government, the Accountant General or the Chief Accounting Authority of the State Government as the case may be, issues an advice to the Reserve bank of India, central Accounts Section, Nagpur requesting it to debit the State balances and credit the Central Government balances in the ledger account of the concerned Ministry/Department on the due date of repayment and endorses a copy thereof to the Principal Accounts Office of the Central Ministry/Department giving full particulars of the loan, etc.

4.3.2 On receipt of the copy of the advice and/or the intimation from the RBI, CAS, Nagpur the Principal Accounts Office makes the following entry in its books:

Dr. 8658-Suspense Accounts
110-Reserve Bank Suspense- 
Central Accounts Office

Cr. 7601-Loans and Advances to State Governments (upto sub-head level as per details furnished by the Accountant General /Chief Accounting Authority of the State in the copy of the advice) and/or

Cr. 0049-Interest Receipts

01--Interest from State Governments. (The correct minor head 'Interest on Loans for State Plan Schemes/Central Plan Schemes/Centrally Sponsored Plan Schemes etc. may be given as the case may be).

4.3.3 The Reserve Bank of India, Central Accounts Section, Nagpur, acts on the advice received from the Accountant General / Chief Accounting Authority of the State and debits the balances of the State and passes on the credit to the account of the Central Government. This is done by issue of a clearance memo giving full particulars of the advice. A copy of the clearance memo is endorsed to the Principal Accounts Office of the concerned Ministry/Department. The transaction is also reflected in the monthly statement of accounts rendered to him. On receipt of such statement, the Principal Accounts Office prepares a Transfer Entry as indicated below:

Dr. 8675-Deposits with Reserve Bank;
101-Central-Civil 

To 

8658-Suspense Accounts
110-Reserve Bank Suspense Central Accounts Office

(-) Dr.

(Transfer Entry prepared on receipt of the clearance memo monthly statement of balances from the RBI, CAS, Nagpur for repayment of loan no.................. ........../ interest on loan no.................. .......).

Note 1: The banking business of the Government of Jammu & Kashmir is not conducted by the Reserve Bank of India. For payment of loans/grants to the State Government, the Ministry/Department issues necessary sanction. On the basis of the sanction, the Principal Accounts Office of the concerned Ministry/Department issues an Account Payee Cheque in favour of the Secretary to the Government of Jammu and Kashmir Finance Department and sends the same to Jammu & Kashmir Bank Ltd., New Delhi for credit to the account of the Jammu & Kashmir Government. An intimation of payment with necessary particulars is also sent to the Secretary Finance Department and Accountant General, Jammu & Kashmir alongwith copy of the sanction letter etc. simultaneously.

Note 2: The banking business of the Government of Sikkim is also not conducted by the Reserve Bank of India. For payment of loans/grants to the Government of Sikkim, the concerned Ministry/Department issues sanction and endorses copies thereof to the Finance Department of Government of Sikkim and the Accountant General (Central) Calcutta. On the basis of the Sanction issued by the competent authority, the Principal Accounts Office of the Ministry / Department makes payment to the Government of Sikkim by a bank draft in favour of the Secretary, Finance Department drawn on the State Bank of India. While forwarding the draft to the Government of Sikkim, the Principal Accounts Office has to furnish to the Government of Sikkim, the full particulars of the payment with copy to the Accountant General (Central), Calcutta.

Note 3:- The Union Territory Governments (with Legislature) have no separate balance with the Reserve Bank of India, though they have a separate Consolidated Fund of their own. For payment of loans/grants to the Union Territory Governments, the concerned Ministry/Department issues a sanction and endorses copies thereof to the Finance Secretary and Accountant General / Accounts Officer concerned. On the basis of the sanction issued by the competent authority, the Principal Accounts Office of the Ministry/Department makes payment to the Union Territory Governments (with Legislature) by bank drafts in favour of the Accountant General / Accounts Officer as the case may be. While forwarding the bank draft, the Principal Accounts Office has to furnish full particulars of the payment and also to, endorse a copy of the forwarding letter to the Finance Secretary of the Union Territory Government.

Note 4 :-The repayment of loans and payment of interest thereon by Jammu & Kashmir, Sikkim and Union Territory Governments (with Legislature) whose banking business is not conducted by the Reserve Bank of India, the system of direct payment by bank drafts in favour of the concerned Principal Accounts Office or specified Pay and Accounts Office is followed.