Rule 9 — GAR
Original Rule Text
# 9. Accounts of State Governments with the bank
Each State Government has made a separate agreement with the Reserve Bank: of India by virtue of which the general banking business of that Government (in which business is included, the receipt, collection, payment and remittance of moneys on behalf of that Governmet)) i carried on and transacted by the Reserve Bank, in accordance with and subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and in accordance with and subject to such orders as may from time to time be given to the Reserve Bank by the: State Government. The operations of each State: shall, however, be confined to the offices and branches of the Reserve Bank of India and of the bank which have: been designated as falling within the area of that particular State. The receipt and payment of moneys on behalf of a State outside its jurisdiction shall ordinarily be arranged through the Accountant General of the State in which the transactions take place.
NOTE:- The Governments of: Jammu and Kashmir and Sikkim have not: so far entered into agreement with the Reserve Bank of India for the conduct of their general banking business by the Reserve Bank.
9. Subject to any separate agreements that have: been or may be arrived at between the various Governments, the pay and allowances including travelling allowances of a Government: servant: summoned to give evidence in his official capacity in a criminal Court or in a Civil Court in a case in which Government is a party or during the period of his absence, are debited to the Government under which he is employed. Actual expenses under: the rules of the court, if: admissible, are, however, payable by the court, and debited to court contingencies.
# II. Incidence of Leave Salaries
The following rules govern the incidence of leave salaries of Government Servants who have served under two or more Governments:-
The: liability for leave salary will be borne in full by: the Department from which the Government servant proceeds on leave, whether it be his parent Department or a borrowing Department with whom he is on deputation.
- III. Incidence of Pensions
Except in regard to the apportionment of liabilities of pensions of Government servants who retired after serving the undivided India between India and Pakistan, the: following rules regulate the adjustment of pensionary charges of Government servants who have served one or more than one Government.
The liability for pension including gratuity will be borne in full by the Central/State Government to which the Government servant permanently belongs at: the time of retirement.
What This Means
Rule 9 describes the banking arrangements for State Governments with RBI, which mirror the Central Government's arrangement described in Rule 7. Each State Government has a separate agreement with RBI under which RBI handles all the State's general banking business — receipts, payments, and remittances. However, each State's banking operations are confined to RBI/SBI offices within that State's geographic area.
An important note is that some States (historically Jammu and Kashmir and Sikkim) had not entered into agreements with RBI and therefore conducted their banking separately. For cross-boundary transactions — where a State needs to receive or make payments outside its own territory — these are normally routed through the Accountant General of the State in which the transaction takes place, rather than directly.
The rule also covers significant incidence-of-charges rules: leave salary liability follows the department from which the servant proceeds on leave; pension liability is borne entirely by the government to which the servant permanently belongs at retirement; and audit costs are borne by the Central Government as the CAG performs a statutory constitutional function.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Each State Government has a separate banking agreement with RBI under the RBI Act 1934.
- 2State banking operations are confined to RBI/SBI offices within the State's geographic area.
- 3Cross-State financial transactions are routed through the Accountant General of the State where the transaction occurs.
- 4Leave salary is borne by the department from which the government servant proceeds on leave (parent or borrowing department).
- 5Pension liability is borne entirely by the government to which the servant permanently belongs at the time of retirement.
- 6Audit costs under Article 149 are borne by the Central Government as the CAG performs a constitutional function.
- 7Some States (like J&K historically) have separate banking arrangements not involving RBI.
Practical Example
Consider Smt. Anita Sharma, an IAS officer of the Rajasthan cadre currently on deputation to the Government of India, Ministry of Finance. She proceeds on earned leave for 30 days while on deputation. Under Rule 9 (read with the Incidence Rules in Appendix 5), her leave salary during this period is borne by the Ministry of Finance — the borrowing department from which she is actually proceeding on leave — not by the Rajasthan Government. When she retires 15 years later while serving in Rajasthan, the pension liability is borne in full by the Rajasthan Government (her permanent government at retirement).
For audit costs, when the CAG conducts audit of Odisha Government's accounts, the cost of conducting that audit is borne by the Central Government, not by Odisha. This is because the CAG is performing a statutory function under Article 149 of the Constitution, and such constitutional functions are charged to the Central exchequer.
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.