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GOVERNMENT OF INDIA (BHARAT SARKAR) MINISTRY OF RAILWAYS (RAIL MANTRALAYA ) (RAILWAY BOARD) No.F(E)Spl.2002/ADV.2/1 All GMs etc.

(As per Standard List) Sub:- Sanction of loans and advances timely and regular recoveries of the same. As a result of vigilance investigations recently conducted in a Production Unit it has come to Boards notice that several irregularities related to recovery of various advances sanctioned to Railway employees are being committed. It has been noticed that no effective documentation system is being maintained for monitoring whether the sanctioned amount of advance has been actually utilized for the purpose it had been sanctioned or not, whether it has been utilized within the period of time as specified in the sanction or not, whether the recovery of the advance/Loan and the interest including penal interest is being done as per provisions of IREM and Boards extant instructions. Besides being a serious violation of extant rules, it is resulting in fiscal loss to the exchequer. In this connection attention is drawn to various provisions stipulated in the extant rules for timely and regular recovery of advances, some of which are highlighted below:i) i) In case the railway employee who has been sanctioned an advance for purchase of a conveyance, does not complete the purchase and pay for the conveyance within one month of the drawal of advance, he shall refund forthwith the full amount of advance drawn together with interest thereon for one month. However, a competent authority, in exceptional cases, may extend the period of one month prescribed in this rule up to two months. (Ref. Sub Para (5) of Para(1108) of IREM). ii) When the advance is retained beyond one month without purchase of the vehicle, penal interest will be chargeable. Also failure to produce the registration book of the vehicle within one month of purchase or within two months of drawal of advance will render the Railway servant liable for levy of penal interest. (Re. 1108(5) of IREM). iii) It is mandatory that the sanction for all types of advances must stipulate the chargeable rate of interest at 2-1/2% above the prescribed rate of interest, clearly indicating that in case all terms and conditions attached to the sanction, including those relating to the recovery of amount, are fulfilled completely to the satisfaction of the competent authority, rebate of interest to the extent of 2-1/2% will be allowed.(Ref. Boards letter No. F(E)Spl.80.ADV.2/5 dated 5.1.1981 copy enclosed). New Delhi dated 19.8.2002

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iv) In the case of an advance for purchase of motor car the Railway servant, before he draws the advance, is required to execute an agreement in the form prescribed separately for initial purchase of conveyance and already purchased conveyance as the case may be, hypothecating the conveyance (motor car) to the President as security for advance. Failure to execute the mortgage bond in time will render the railway servant to refund forthwith the whole of the amount of advance with interest accrued thereon. (Ref. Sub Para(7) of Para(1108) of IREM). v) It is the responsibility of the sanctioning authority to scrutinize the cash receipts to ensure that the advance has been utilized for the purchase of the conveyance within the prescribed period and that the actual price is not less than the amount of advance (Ref. Sub Para (8) of Para (1108) of IREM). vi) The sanctioning authority, while scrutinizing the cash receipt must also ensure that the advance has been utilized for the purchase of the conveyance within the prescribed period, the actual price is not less than the advance and thereafter he should certify the position to the Accounts Officer concerned. (Ref. Sub Para (9) (1108) of IREM.). vii) Recovery should commence with the first drawal of pay after the advance is drawn. The authority sanctioning the advance may permit recovery to be made in lesser number of installments if the railway servant so desires. The amount of interest will be recovered in one or more installments, with a proviso that such installment being not appreciably greater than the installments by which the principal was recovered. The recovery of interest will commence from the month following that in which the whole of principal has been repaid. (Ref. Sub Para (10) of Para(1108) of IREM). viii) Attention is also drawn to note 6(b) and (c) of sub-para 11312 (17) of IREM Vol. I (Revised Edition-1989) regarding recovery of HBA. It provides that recovery of advance shall be effected from the monthly pay or the leave salary/subsistence allowance bills of the railway servant concerned by the Head of the Office or the Accounts Officer concerned. The recoveries will not be held up or postponed except with the prior concurrence of the Railway Board. Even in the event of subsistence allowance payable being reduced on prolonged suspension the recoveries may be suitably reduced by the Head of the Department, if considered necessary, after obtaining the concurrence of the Railway Board. It is also provided that if a railway servant ceases to be in service for any reason other than normal retirement/ super-annuation, or if he/she dies before the repayment of the advance in full, the entire outstanding amount of the advance shall become payable to the Government forthwith.

3 Detailed instructions exist for timely and regular recovery of various advances as mentioned above. Despite these, lapse in recovery have still occurred,. It is only because there is no proper system to monitor whether the recoveries are being made regularly and in time and also due to lack of proper coordination among concerned Branches.

4 In view of the above, Board desires that all administrative Branches concerned with grant of various advances shall maintain a register to monitor submission of requisite documents by loan within prescribed time period, regular and timely recoveries of various advances sanctioned to railway employees by obtaining monthly statements from the respective salary bill units of the employees and making actual recoveries. This register should be submitted for personal inspection of the concerned branch officer monthly and Head of the Department who will append his signature in certification of having inspected the recoveries being made regularly and timely. This item will also be reflected in Monthly Progress Report of the Office submitted to Head of the Office. Board also desire that an Annual Report is submitted by each Railway to Railway Boards office in the month of January declaring that amounts recoverable against various advances during the proceeding year have been fully recovered, and Boards concurrence has been obtained for recoveries held-up or postponed, if any. A report for the current calendar year (2002) may please be furnished by end of January 2003. 5 Failure to observe Boards instructions given above would be viewed as serious dereliction of duties on the part of concerned officials. Receipt of this letter may please be acknowledged.

GOVERNMENT OF INDIA(BHARAT SARKAR) MINISTRY OF RAILWAYS(RAIL MANTRALAYA) (RAILWAY BOARD) No.F(E)Spl.80 ADV 2/5 New Delhi, dated:5.1.1981

Sub: Rebate in the interest rate necessary conditions to be inserted in the Agreement Form. Under the extant instructions as issued from time to time, the rate of interest to be charged on the various types of interest bearing advances is the simple rate of interest specifically fixed for the purpose by the Government of India from year to year for such advances. Ministry of Railways have now decided in consultation with the Ministry of Finance, that in the cases of such interest bearing advances, sanctions to be issued by the competent authority/agreements (wherever prescribed) to be executed at the time of drawing of advance, should stipulate condition for recovery of interest at 2-1/2% above the prescribed rate provided that if condition attached to the sanction including these relating to recovery of amount are fulfilled completely to the satisfaction of the competent authority, a rebate of interest to the extent of 2-1/2% will be allowed. 2. Similarly in the case of non-interest bearing advances, sanctions to be issued by the competent authority/agreements (wherever prescribed) to be executed at the time of drawing of advance, should stipulate that no interest shall be chargeable if the conditions attached to the sanction including those relating to the recovery of the amount are complied with fully to the satisfaction of the competent authority. In cases, however, of default these advances become interest-bearing and from such defaulters the interest shall be charged @2-1/2% above the prescribed rate of interest as in the case of interest bearing advances. 3. 3. Para 1 and 2 above have the sanction of the President. (S.N. Mukherjee) Deputy Director Finance (Estt.), Railway Board.

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