This Reserve Bank of India (RBI) circular, dated May 29, 2020, addresses the recovery of penal interest on delayed remittance of government receipts into government accounts by agency banks. It withdraws circular RBI/2019-20/70 DGBA.GBD.No.65342/01.011/2019-20 dated September 26, 2019, which had advised agency banks to disregard petty claims of penal interest of ₹500 or below per transaction. This earlier instruction had aligned the treatment of State Government transactions with that of Central Government transactions. The withdrawal is based on a reconsideration by the Comptroller and Auditor General of India (CAG), who now advises against ignoring penal interest amounts of ₹500 or below and has withdrawn their earlier concurrence. Consequently, agency banks are instructed to calculate penal interest for delayed reporting of State Government transactions as per the methodology outlined in RBI circular RBI/2007-2008/291 DGBA.GAD.No. H-14061/31.04.008/2006-07 dated March 21, 2007, without any filters for amounts of ₹500 or below. Agency banks are directed to immediately notify their branches accredited to conduct state government transactions. The Department of Government Bank Accounts, Central Office can be contacted at Telephone: 022-23016214, 022-23001670, Fax No. 022-23008764/23009126/23010095, email : cgmicdgbarbi.org.in. The Chief General Manager, Charulatha S. Kar, authorized the circular.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system and currency.
Agency Banks: Banks authorized to handle government transactions on behalf of the Reserve Bank of India.
Comptroller and Auditor General of India: The supreme audit institution of India, responsible for auditing the accounts of the Union and State governments.
Accountants General: Officials responsible for maintaining government accounts at the state level.
RBI20192070 DGBA.GBD.No.65342.01.011201920 dated September 26, 2019: RBI circular regarding petty claims of penal interest on delayed reporting of State Government transactions.
RBI2007291 DGBA GAD.No. H1406131.04.008200607 dated March 21, 2007: RBI circular providing a methodology to calculate penal interest based on transaction value.
State Government: The government of an individual state within India.
Mumbai, Maharashtra: City in India where Central Office, Department of Government Bank Accounts of Reserve Bank of India is located
भारतीय �रज़व र् ब�क
_________________________RESERVE BANK OF INDIA________________________
www.rbi.org.in
RBI/2019-20/248
DGBA.GBD.No.1909/42.01.011/2019-20 May 29, 2020
The Chairman and Managing Directors/ Managing Director/ CEO
All Agency Banks
Dear Sir / Madam
Recovery of Penal Interest on delayed remittance of Government Receipts into
Government Account
Please refer to our circular RBI/2019-20/70 DGBA.GBD.No.653/42.01.011/2019-20
dated September 26, 2019 through which agency banks were advised that petty
claims of penal interest involving an amount of ₹ 500/- (on per transaction basis) or
below would be ignored and excluded from the purview of penal interest on delayed
reporting of State Government transactions, thus bringing it at par with similar
instructions on reporting of Central Government transactions. These instructions were
issued with the approval of Comptroller and Auditor General of India (C & AG).
2. The office of C & AG has now advised that they have reconsidered the matter
based on feedback received from the Accountants General and hence do not concur
with proposal of ignoring the penal interest amount of ₹ 500/- or below. O/o C&AG has
advised that they have withdrawn their concurrence given earlier based on which RBI
had issued the instructions vide the above circular of September 26, 2019 and have
also indicated that the AG offices are being advised that in all the cases of calculation
of penal interest the ibid circular should not be taken into account.
3. Further, the O/o C&AG has also advised that since the circular No. RBI/2007/291
DGBA GAD.No. H-14061/31.04.008/2006-07 dated March 21, 2007 already provides
for a methodology to calculate penal interest based on transaction value of upto ₹ 1
lakh and above ₹ 1 lakh, there is no need for further filters of ₹ 500/- or below (as per
our circular DGBA.GAD.No.H-4831/42.01.011/2012-13 dated February 18, 2013).
सरकारी एवं ब�क लेखा िवभाग, केन्�ीय कायार्लय, मुंबई स��ल रेलवे स्टेशन के सामने, चौथी मंिजल,भायखला, मुंबई - 400 008
Department of Government & Bank Accounts, Central Office, Opp. Mumbai Central Railway Station,4th Floor, Byculla, Mumbai - 400 008
Telephone: (022) 23016214,(022)23001670 Fax No. (022) 2300 8764/23009126/2301 0095, e-mail :cgmicdgba@rbi.org.in
-िहन्दी आसान ह,ै इसका �योग बढ़ाइए-2
4. Accordingly, agency banks are advised that the circular RBI/2019-20/70
DGBA.GBD.No.653/42.01.011/2019-20 dated September 26, 2019 stands withdrawn
from the date of its issue. Agency banks may take note that as advised by the O/o
C&AG, penal interest calculation for delayed reporting of State Government
transactions will be made as per the instructions given in the RBI circular
RBI/2007/291 DGBA. GAD. No. H- 14061/31.04.008/2006-07 dated March 21, 2007
without any further filters of ₹ 500/- or below.
5. You may bring these instructions immediately to the notice of your branches
accredited to conduct state government transactions.
Yours faithfully
Charulatha S Kar
Chief General Manger