Rule 10 — GAR
Original Rule Text
10. Each office or branch of the Reserve Bank, or the: State Bank of India acting as agent of the Reserve Bank, shall keep a separate account of cash transactions undertaken by it on behalf of the State Government within whose area iti is situated. All transactions which cannot be debited or credited directly to the account of the Central Government with the Bank and: transactions of other State Governments shall also be taken to the account of the Government of the State in which they occur. Statement of these transactions together with all supporting vouchers, challans, paid cheques etc. shall be forwarded by each office and branch of the Bank daily to the local Treasury Officer or to: the Accountant General as the case may be. The transactions shall also be reported to Central Accounts Section, Reserve Bank of India, Nagpur.
NOTE:- With effect from 1st February, 1978 transactions on account of discharge value of, and: periodical interest on: securities of State Governments, as well as receipts on account of: subscriptions against market loans floated by: State Governments are taken by the officers of the Reserve: Bank of India directly against the cash balance of the: State: Government concerned with the Central Accounts Section of the Reserve Bank of India, Nagpur.
What This Means
Rule 10 explains how RBI or SBI branches keep separate accounts for each State Government and how these transaction records flow to the State Treasury Officer or Accountant General. Each bank branch operating within a State maintains a distinct account for that State's transactions. At the end of each day, the branch sends a statement of all transactions — along with supporting vouchers, challans, and paid cheques — to the local Treasury Officer or the Accountant General.
If a transaction cannot be directly credited or debited to the Central Government's account, or if it pertains to another State Government, it is included in the account of the State in which it occurs. All transactions are also reported to CAS Nagpur to ensure the central banking record is complete.
An important update since 1st February 1978: transactions relating to State Government securities (market loans, interest payments, and principal repayments) are directly taken against the cash balance of the concerned State Government by RBI officers at CAS Nagpur, bypassing the individual bank branches for these specific transactions. This direct settlement at Nagpur ensures accuracy and timeliness for these high-value financial market transactions.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Each bank branch keeps a separate account for the State Government within whose area it is situated.
- 2Transactions that cannot be credited to the Central Government's account are booked to the local State Government's account.
- 3Bank branches send daily statements with all supporting documents (challans, paid cheques, vouchers) to the Treasury Officer or Accountant General.
- 4All transactions are also reported to CAS Nagpur for central consolidation.
- 5Since 1st February 1978, State Government securities transactions (market loans, interest, principal) are directly settled at CAS Nagpur against the State's cash balance.
- 6The rule ensures no transaction 'falls between the cracks' — everything is captured either in the Central or the relevant State's account.
Practical Example
The SBI branch at Bengaluru collects income tax on behalf of the Central Government and also accepts deposits of commercial taxes on behalf of the Karnataka Government. Every working day, the branch sends two separate daily statements: one for Central Government transactions (to the relevant Central PAO) and one for Karnataka Government transactions (to the Karnataka Treasury Officer or Accountant General). Each set of statements is supported by the respective challans.
When the Karnataka Government's Rs. 3,500 crore market loan reaches maturity, RBI's CAS Nagpur directly debits the Karnataka Government's account maintained in its books for the principal repayment and interest, without routing it through a physical bank branch. This direct settlement at Nagpur, introduced from February 1978, is specifically for State Government securities transactions and ensures these high-value transactions are processed accurately and promptly.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.