All Agency Banks
and Controls for conduct of government banking
Please refer to our Master
Circulars DGBA.GAD.No.2/31.12.010/2015-16 dated July 1, 2015 on
Conduct of Government Business by Agency Banks - Payment of Agency
Commission and DGBA.GAD.No.H-1/31.05.001/2015-16 dated July 1, 2015 on
Disbursement of Government Pension by Agency Banks that, inter alia, deal
with Systems and Controls in agency banks for conduct of government
2. In addition to existing
instructions, agency banks may ensure that internal/concurrent audit at
bank branches verifies whether government business is being conducted as
per rules and regulations prescribed by government/RBI. Accordingly, the
internal/concurrent audit at bank branches may also examine, among other
things, various aspects of government banking such as agency commission
claims and pension payments. A checklist may be provided to the inspecting
officers/auditors, which may at a minimum include the items given in the Annex.
Accordingly, Annex 2 of the Master Circular
DGBA.GAD.No.H-1/31.05.001/2015-16 on Disbursement of Government
Pension by Agency Banks dated July 1, 2015 stands withdrawn.
(D. J. Babu)
Deputy General Manager
Encl.: As above
relating to government business for internal / concurrent audit
Part A: Agency commission claims
Internal inspectors/auditors may
verify the agency commission claims submitted by branches and confirm their
accuracy during the course of their inspection/audit. The following may be
specifically examined during the course of internal/concurrent audit at
agency bank branches:
system in place to arrive at total number of transactions is robust and
free of errors.
of different types of transactions (physical/electronic receipts and
pension/non-pension payments) are in accordance with RBI instructions.
of number of transactions reported in agency commission claims.
agency commission has been claimed on error scroll transactions. (Banks are
not eligible for commission on error scrolls as the commission on the
original transaction is being paid).
proper records are maintained at branches as regards government business
and agency commission claims (wherever the branch has a role in making such
the entries in the registers/printouts relating to agency commission claims
are properly authenticated.
Part B: Pension related issues
Internal inspections should
assess branch performance in servicing pensioner customers. In this regard,
the following may be ensured:
specific questionnaire covering all aspects of pension payment may be
devised for use during inspection of pension paying branches.
officers may also, during inspections, call up pensioners at random and
enquire about their satisfaction with pension-related services.
detailed check-list relating to pension payments/government business may be
given by banks to internal auditors/inspectors in order to adhere to the
recommendations of the Prabhakar Rao Committee, constituted by the
Government of India, relating to pension payments/government business.
These include the following:
there is delay in payment of pension, revision of pension, revision in
dearness relief etc.
the branch manager has structured interaction with a cross section of
pensioners serviced at the branch on quarterly basis, where the number of
pensioners of all governments and departments exceeds a fixed number, say,
100 or 200.
nominations have been obtained for all pension accounts.
pension accounts have been converted into joint accounts wherever
the bank branch has an effective complaint redressal mechanism and the
complaints of pensioners are attended promptly and their grievances
the pension is credited to pensioner’s account during the last four working
days of the month except for the month of March for which pension is to be
credited on or after first working day of April.
the pension paying branch obtains Life Certificate/ Non-employment
certificate/ Employment Certificate from the pensioners in the month of
November every year.
pension paying branches deduct income tax at source from pension payments wherever
paper tokens in acknowledgement of cheques presented are invariably given
by the tax collecting branches.
the challans are stamped giving bank’s BSR code and Challan Identification
Number (CIN) clearly.
the stamped challans are kept in the custody of bank’s staff and handed
over to the concerned tax payer only on production of the paper token.