Para 4.6.8 — CAM
Original Rule Text
4.6.8 Payment of Penal Interest by Banks:
Banks will pay penal interest for claims lodged by concerned Ministries/Departments within a period 3 months from the date of issue of claims by Ministries/Departments. All agency banks may build up their own internal control mechanisms for preventive and corrective actions for their bank and branches.
4.6.9 Resolution of any dispute:
i. In case of any dispute in penal interest between the banks and the Ministries/Departments, such cases may be forwarded by the Banks to the GBA section of CGA for necessary action. ii. All cases of dispute forwarded by banks will be put up to a committee formed for this purpose. The committee would be chaired by Additional CGA (A&FR), O/o CGA with the following members. a. Pr. CCAs/CCAs/CAs (Independent charge) of the concerned Ministry for cases relating to Civil Ministries/Departments. b. JS Level officer (in case of Non-Civil Ministries) c. CGM, DGBA, RBI d. Representative from the concerned bank at CGM/GM level e. Jt. CGA (GBA)-Member Secretary
iii. In case the banks do not pay penal interest or do not lodge any dispute/appeal within the prescribed timelines given above, direct debit of the bank's account will be done for the amount of Penal interest in consultation with RBI.
What This Means
This para covers how banks pay penal interest claims and how disputes are resolved. Banks must pay penal interest within 3 months of receiving the claim from the concerned Ministry/Department. If a bank disputes a penal interest claim, it forwards the case to the GBA (Government Banking Affairs) section of the CGA, which puts it before a committee chaired by Additional CGA (A&FR). The committee includes the concerned Pr.CCA/CCA/CA, a Joint Secretary-level officer for non-civil ministries, the CGM of RBI DGBA, the bank's CGM/GM representative, and Jt. CGA (GBA) as Member Secretary. If the bank neither pays nor disputes within the prescribed timeline, the government can directly debit the bank's account.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Banks must pay penal interest within 3 months of receiving the claim from the Ministry/Department
- 2Disputes are forwarded to CGA's GBA section and resolved by a committee chaired by Additional CGA (A&FR)
- 3Committee includes Pr.CCA/CCA/CA, RBI CGM, bank representative (CGM/GM level), and Jt. CGA as Member Secretary
- 4If the bank fails to pay or dispute within timelines, direct debit of the bank's account is authorized
- 5Banks should build internal control mechanisms for preventive and corrective action
Practical Example
A Ministry's Pr.CCA sends a penal interest claim of Rs 2 lakh to a public sector bank for delayed remittances over a quarter. The bank's head office disagrees with the delay calculation for 5 transactions. Within the prescribed timeline, the bank forwards its dispute to the GBA section of CGA with supporting documents. The committee convenes with the Additional CGA as chair, hears both sides, reviews the bank scrolls and remittance dates, and arrives at a revised penal interest amount. If the bank had ignored the claim entirely for over 3 months without paying or disputing, the government would have directly debited the bank's account for the full claimed amount.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
How long does a bank have to pay penal interest?▼
What happens if a bank neither pays nor disputes the penal interest?▼
Who chairs the dispute resolution committee?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.