Executive Summary:
The Reserve Bank of India (RBI) is implementing a new system of oversight for government business conducted by agency banks. This includes expanding review scope to Head Offices, discontinuing individual review reports, introducing offsite monitoring, and holding periodical interactions with bank executives. The first offsite monitoring report, related to the quarter ending March 31, 2016, is due within 15 days of that date.
Key Points / Main Content:
* **Review/Inspection Scope:**
* The review/inspection scope will now cover government business at the Head Offices of agency banks, in addition to branches and CPPCs.
* **Reporting Changes:**
* Individual review/inspection reports will be discontinued.
* Action points will be advised to the offices/branches with a copy to the controlling office.
* Comments on "Major" action points may be submitted to the RBI Regional Offices.
* Banks must ensure rectification of other action points, with internal audit examining quality and sustenance.
* **Offsite Monitoring:**
* Agency banks must report details of their government business as per the formats in Annexes 1 and 2.
* Reports should be emailed with a copy to the RBI Regional Office.
* The first report is for the quarter ending March 31, 2016, and is due within 15 days.
* Annex 3 provides a list of agency banks and their corresponding RBI Regional Offices.
* **Periodical Interactions:**
* RBI Regional Offices will hold periodical interactions with senior executives of agency banks (Central Office for SBI).
* The purpose is to maintain communication and gather firsthand information on government business.
* Discussion agenda will include:
* Developments in government business since last inspection.
* Sustenance of compliance with inspection report findings.
* Progress in cases of large frauds related to government business.
* Position regarding complaints.
* Pension related issues.
* Issues raised by Central and State Government Departments.
* Issues raised by the Office of CAG and other government agencies.
* Other related issues.
Impact Analysis:
Agency Banks:
* Impact: Changes to the oversight of government business, including expanded review scope, new reporting requirements, and periodical interactions with RBI.
* Action Required: Prepare to be reviewed at the Head Office level, implement offsite monitoring and reporting as per the provided formats, prepare for periodical interactions with RBI, and address/rectify action points raised by the RBI.
RBI Regional Offices:
* Impact: Increased responsibility for oversight of government business, including reviewing reports and holding periodical interactions with agency banks.
* Action Required: Prepare to receive and review offsite monitoring reports, conduct periodical interactions with agency banks, and follow up on action points raised during reviews.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for oversight of government business in agency banks.
Agency Banks: Banks authorized to conduct government business on behalf of the Reserve Bank of India.
Focal Point Branches: Specific branches of agency banks that handle a significant volume of government transactions.
Centralised Pension Processing Centres CPPCs: Centers within agency banks responsible for processing government pensions.
Regional Offices of the Reserve Bank: Local offices of RBI which will be responsible for action points and monitoring of government business.
State Bank of India: An agency bank whose meetings will be held by the Central Office.
Office of CAG: Office of the Comptroller and Auditor General of India. They conduct periodical audit inspections regarding the conduct of government business by the agency bank.
G. Sreekumar: Chief General Manager at Reserve Bank of India
RBI/2015-16/361
DGBA.GAD.No-3147/44.01.001/ 2015-16 April 07, 2016
The Chairman/ Managing Director/ Chief Executive Officer/
Agency Banks
Dear Sir/ Madam
Oversight of Government Business in Agency Banks
As you are aware, in terms of the agency agreement entered into with agency banks
for conduct of government business, the Reserve Bank of India carries out periodical
review/inspection of government business. We have so far been conducting such
review/inspection at select branches, including Focal Point Branches and
Centralised Pension Processing Centres (CPPCs). Relative reports were being
issued to the branch/office concerned at the end of the review/inspection.
2. It has since been decided to put in place a new system of oversight of
government business. Accordingly, the following will be the main changes:
(a) The scope of the review/inspection will now also cover government
business at the Head Offices of agency banks. Various branches and
CPPCs will continue to be visited as hitherto.
(b) The current practice of issuing reports at the end of the review/inspection
will be discontinued. However, the offices/branches will be advised of
action points, if any, with a copy to its controlling office.
(c) Comments in respect of action points marked as “Major” may be submitted
to the Regional Offices of the Reserve Bank under which the branch/office
falls.(d) As regards other action points, necessary rectification may be ensured by
the bank itself. However, its quality and sustenance may be examined and
commented upon by internal audit.
3. As a part of the new arrangements, it has been decided to introduce offsite
monitoring of government business. Accordingly, agency banks may report details of
their government business as per the formats enclosed in Annexes 1 and 2. The
completed statements may be e-mailed with a copy to the Regional Office of
Reserve Bank of India under whose jurisdiction the bank falls. A list of agency banks
and the Regional Office of the Reserve Bank under which it falls is given in Annex 3.
The first such report may relate to the quarter ending March 31, 2016, and be
submitted within 15 days from the date to which it relates.
4. It has also been decided to have periodical interactions with senior executives
of your bank dealing with government business. Such meetings will be held by the
Regional Offices concerned of Reserve Bank, except in the case of State Bank of
India, where the meetings will be held by the Central Office. The purpose of the
informal meetings would be to maintain a line of communication with the agency
bank and to have first-hand information and feedback on government business being
conducted by it. The agenda for discussion would broadly depend on the bank’s size
and nature of government business being handled by it. The discussions would, at a
minimum, include the following:
(a) Developments in the agency bank’s government business since last
inspection;
(b) Sustenance of compliance with inspection report findings;
(c) Progress in the case of large frauds relating to government business;
(d) Position with regard to complaints;
(e) Pension related issues;
(f) Issues raised by Central and State Government Departments such as delays
in remittance of government funds and penalties imposed;
2(g) Issues raised by the Office of C&AG and other government agencies in their
periodical audit/inspection reports regarding the conduct of government
business by the agency bank; and
(h) Other related issues.
Yours faithfully
(G. Sreekumar)
Chief General Manager
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