Rule 11 — GAR
Original Rule Text
11. Complete accounts of the Central Government and of each of the State Government with the Bank shall be maintained by the Central. Accounts Section of the Reserve Bank: at Nagpur which shall also act: as a general clearing house for the adjustment of () all transactions between different State Governments and (ii such transactions between the Central and State Governments as may be specified by the Central Government. All adjustments to be made between the accounts of different State Governments as well as all payments which one of these Governments has to make to: another shall be advised by the. Accountant General authorised in this behalf: to the Central Accounts Section of the Reserve Bank which will pass the necessary entries in the accounts of the Governments concerned, maintained in its books. Similarly, such adjustments in the case of: specified transactions between the Central Government and: the State Governments as well as transactions between Defence, Posts, Telecommunications and Railways inter se will be advised to the Central. Accounts Section of the Reserve Bank by the. Accountant General authorised in this behalf for making monetary settlement in the accounts of the Government concerned maintained in the books of the Bank. However, the advices to be sent by the Accountant General to the Central Accounts Section, Reserve Bank of india, Nagpur debiting to Central Government balances shall be supported by: a certificate to the effect that "this advice represents withdrawal of an earlier erroneous credit to the Central Government: and does not represent withdrawal of payments already made: which were due to the Central Government and that necessary: details are being furnished to the Principal Accounts Officer of the Central Government concerned." Details of transfers affected in its books against the balance of the State Government or of the Central Government (and between accounts of Defence, Posts, Telecommunications and Railways inter: se): as the
case may be, on account of adjustments advised by. Accounts Officers authorised for: the purpose, shall be communicated by the Central Accounts Section of the Bank to the originating as well as to the effected Accounts Officers or Accounts Officer of the concerned Ministry/ Department of the Central Government at the close of each day. At the close of the accounts of each month, a statement of closing balance of each State Government in the books of the Bank after: taking into accounts all cash transactions in all the offices, branches and agencies of the Bank and the adjusting transactions in its own books shall be forwarded by the Central. Accounts Section: to the Accounts Officer concerned.
Similarly, a: statement of the closing balance of the: Central Government comprising:-
( Central Government Account Balance (in respect of Central transactions of Accounts Officers and separated accounts of Union Territories only).
What This Means
Rule 11 establishes CAS Nagpur as the central clearing house for all inter-governmental financial adjustments. All adjustments between different State Governments, and specified adjustments between Central and State Governments, are processed through CAS Nagpur. When one State Government has to pay another, the Accountant General advises CAS Nagpur, which simply passes debit and credit entries in the respective accounts — no physical cash changes hands between States.
Similarly, adjustments between Central Government, Railways, Posts, Telecommunications, and Defence inter se are also settled through CAS Nagpur by accounting entries rather than actual cash transfers. This mechanism avoids the cumbersome process of writing cheques between government entities and speeds up the settlement process.
At the close of each month, CAS Nagpur sends closing balance statements to all Principal Accounts Offices of Central Ministries, to the CGA for the consolidated Central position, and to all State Accountants General for State positions. An important safeguard: when an Accountant General sends an advice to CAS Nagpur for debiting the Central Government balance (essentially withdrawing money from Centre), it must be accompanied by a certificate that the debit represents withdrawal of an earlier erroneous credit — not a fresh drawl of money owed to the Centre.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1CAS Nagpur is the general clearing house for all inter-governmental financial adjustments.
- 2Inter-State adjustments and specified Centre-State adjustments are settled by CAS Nagpur through bookkeeping entries, not physical cash.
- 3Adjustments between Central Government entities (Railways, Posts, Telecom, Defence) are also settled through CAS Nagpur.
- 4CAS Nagpur maintains individual accounts for every Central Ministry/Department, every State Government, and every major Central department.
- 5Monthly closing balance statements are sent by CAS Nagpur to CGA, Principal Accounts Offices, and State Accountants General.
- 6Advices debiting Central Government balance must carry a certificate that the debit represents withdrawal of an earlier erroneous credit.
- 7CAS Nagpur maintains a separate 'Departmentalised Ministries Account' to keep these transactions distinct.
Practical Example
The Accountant General of Tamil Nadu needs to remit Rs. 150 crore to the Accountant General of Kerala on account of a construction project for which Tamil Nadu collected funds on Kerala's behalf. Instead of writing a cheque, the TN Accountant General sends an advice to CAS Nagpur instructing it to debit Tamil Nadu's balance and credit Kerala's balance for Rs. 150 crore. CAS Nagpur passes the entries, updates both State accounts, and the settlement is complete — no physical cash moves between the two States.
At the end of March 2025, CAS Nagpur sends the closing balance statement to the Ministry of Finance (CGA). The statement shows: Central Government Account Rs. 45,000 crore, Railway Fund Rs. 12,000 crore, Postal Account Rs. 2,500 crore, Telecommunication Account Rs. 800 crore, Defence Account Rs. 15,000 crore, Departmentalised Ministries Account Rs. 8,000 crore, Total Rs. 83,300 crore. The CGA reconciles this with its own books to ensure they match.
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.