Para 6.2 - Consultant Payments | KartavyaDesk
Original Rule Text
Chapter 6: Forms of Securities, Prices, Payment Terms and Price Variations mandate in RBI’s format may be obtained at the time of consultant registration and in the tender document. The Format is available with all Banks. b) However, if ECS payments are not feasible, payments may be made in exceptional circumstances by cheque/demand draft drawn on a Government treasury or branch of RBI or any Scheduled Bank authorised by RBI for transacting Government business. c) Trade Receivables Discounting System (TReDS) is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs). Payments can also be made through this platform to MSE suppliers/ consultants.
What This Means
Para 6.2 of the Manual for Procurement of Consultancy Services outlines the acceptable methods for making payments to consultants. The primary method is through Electronic Clearing Service (ECS), which is a direct transfer of funds to the consultant's bank account. This is the preferred and most efficient way to pay consultants. The Reserve Bank of India (RBI) provides a standard format for ECS mandates, which should be obtained during consultant registration and included in the tender document. This ensures that the government has the necessary banking details to make electronic payments.
However, the rule acknowledges that ECS payments might not always be feasible. In exceptional cases, payments can be made via cheque or demand draft. These instruments must be drawn on a government treasury, a branch of the RBI, or any scheduled bank authorized by the RBI to handle government transactions. This ensures the security and accountability of the payment process. Finally, the rule also allows for payments to be made through the Trade Receivables Discounting System (TReDS) platform, especially for Micro, Small, and Medium Enterprises (MSMEs). TReDS facilitates the financing and discounting of trade receivables, providing MSMEs with quicker access to funds.
This rule affects all government departments and agencies involved in procuring consultancy services, as well as the consultants themselves. It ensures that payments are made efficiently and securely, while also supporting MSMEs through the TReDS platform.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •ECS (Electronic Clearing Service) is the preferred method of payment for consultants.
- •RBI's standard ECS mandate format must be obtained during consultant registration and included in the tender document.
- •Cheque/Demand Draft payments are allowed in exceptional cases, drawn on specific authorized banks.
- •Payments to MSE suppliers/consultants can be made through the TReDS platform.
- •The rule applies to all government departments and consultants involved in procurement.
Practical Example
The Ministry of Urban Development hires 'Sustainable Solutions Pvt. Ltd.', an MSME, for a city planning project. The contract value is INR 50,00,000. Initially, the ministry attempts to pay via ECS, having collected the RBI-mandated form during registration. However, due to a technical glitch in the payment system, ECS fails. As an exception, the ministry prepares a demand draft drawn on a branch of the State Bank of India (authorized for government transactions) for INR 50,00,000 and delivers it to Sustainable Solutions. Alternatively, Sustainable Solutions, being an MSME, requests payment through the TReDS platform. The ministry approves this, and Sustainable Solutions discounts its receivables on the TReDS platform, receiving early payment from a participating financier, while the ministry settles the full amount on the due date through the TReDS system.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the preferred method of payment to consultants according to Para 6.2?▼
When are cheque or demand draft payments allowed?▼
What is TReDS and how does it relate to consultant payments?▼
Where can I find the RBI's standard ECS mandate format?▼
Which banks are authorized to issue cheques/demand drafts for government payments?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Test Your Knowledge
Question 1 of 3
According to Para 6.2 of the Manual for Procurement of Consultancy Services, what is the preferred method of payment to consultants?
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