Centre for Good Governance

Public Financial Management Projects In Government of Bihar

Our vision
To be a world class institution to guide governance reform To be a think tank to foster growthoriented and people-centric governance To leverage e-Governance for improving service delivery to the citizens

Positions & Profiles

Resource Group Director Dr Rajiv Sharma, IAS DG, CGG Qualification Ph.D. (Engineering & Public Policy), Carnegie Mellon University, USA; Areas of Expertise Urban Administration Urban Development, Infrastructure Development Project Management, Governance Management Development. Strategic Planning Financial Management Service Management Public Financial Management and Accountability. Change Management, Leadership, Organization Behaviour

M. Sivaramakrishna Dy. ED, CGG A. Srinivas Kumar, IA&AS Dy. ED, CGG

B.Tech, IIT, Mumbai MBA, IIM, Ahmedabad M.A. (Economics)

Dr. S. Ramnarayan Ph.D. Organizational Director, Change Management Behaviour, Case Western Resource Group, CGG Reserve University M. Brahmaiah M.Com., Director, Financial Management Kakatiya University Resource Group, CGG

Budget, Accounting & Auditing Reform, State Financial Accountability Assessment, Local Bodies Financial Accountability Assessment.

Working Relationships : National

National Dept of Personnel Training Model Code for Good Governance Good Governance Toolkit IAS Training Restructuring Study Review of Foreign Training Programme for Civil Servants National Agenda for Judicial and Legal Reforms Development of National Public Service Law Handbook on Citizens Charters Capacity Building for Citizens Charters in States Strategic Review of District Administration in India National Implementing Agency for Access to Information Process Reengineering for Service Delivery Improvement Machinery of State Government Study

Dept of Administrative Reforms & Personnel Grievances

Ministry of Housing & Urban Poverty Researchers Colloquium on Urban Poverty Alleviation Integrated Poverty Monitoring System Alleviation National Institute of Urban Affairs (NIUA) Ministry of Urban Development Ministry for Home Affairs Indo-USAID Fire (D) Training Programmes e-Municipality (In association with National Institute of Smart Government) INSTAXX: e-Governance application for Country-wide Instant Alert Network (CIAN) 4

Working Relationships : State Governments

State Governments (Relevant to Southern region only) Andhra Pradesh Strategic & Performance Innovation Unit Governance Reform Programme I-2002-06- Establishment of (SPIU), MA&UD Dept, GoAP strategy, performance and innovation units in key departments Governance Reform Programme II-2006-09- Institutional reforms APPMSDIP in 12 Key Departments for sustained poverty reduction Kerala MGP, Government of Kerala MGP, Government of Kerala DSP, Government of Kerala Centre for Management Development, Trivandrum IMG, Trivandrum Karnataka Indian Institute of Management, Bangalore State ATI, Mysore Tamilnadu Anna Institute of Management, Chennai RTI Implementation (As part of the UNDP-DoPT project on NIA) (State ATI) 5 Strategic Alliance RTI Implementation (As part of the UNDP-DoPT project on NIA) Development, Training & Implementation of Citizens Charter in Pilot LSGIs Developing Systems for Social Audit Development of Grievance Redressal Mechanism Strategic Alliance RTI Implementation (As part of the UNDP-DoPT project on NIA) Comprehensive

International Linkages Strategic Alliances

Maxwell School, Syracuse University Civil Services College, Singapore

Donor Agencies
The World Bank Department For International Development (DFID),UK United Nations Development Programme (UNDP), India Asian Development Bank (ADB) United Nations Online Network in Public Administration and Finance (UNPAN)

International Linkages Projects

e-Justice: UNDP funded project for bringing legal awareness among the rural women Machinery of Government Study An inter-state and inter-country study funded by DFID Local Bodies Accountability Assessment An inter-state and intercountry study funded by DFID ADB-sponsored Training Programme on e-Governance China, Mynamar, Cambodia, Thailand, Laos and Vietnam South Asia Resource Centre on Social Accountability in partnership with the World Bank (SASANet) Training on Community Score Card Sri Lanka Key Issues of Sub-National Governments Expenditure Study
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e-Projects
Accrual based Accounting through ERP system at MCH Online Grievance Redressal Tracking System Urban Water Supply Information System Model Towns Information System (INDIRAMMA) Water Quality & GE cases Monitoring System Project Monitoring System Web-enabled GIS system for Qutubullapur Municipality: APUSP
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Training Programmes
Client Indo-USAID FIRE (D) Programme Areas Financial Management Knowledge Areas City Development Strategy Social & Environmental Impact Assessment Urban Financial Management Accrual based Accounting & budgeting e-Governance Applications GIS Applications Change Management Project development & Implementation Land use & Development Planning Using Land as a resource Digitisation Mapping Land records Land use & Development Planning Using Land as a Resource

GIS Applications

Reforms and Human Resource Development

Process Re-engineering Change Management Leadership Development

Training Programmes
Client GoAP Programme Areas Induction Training programme for Elected representatives of Andhra Pradesh Knowledge Areas Urban Governance Urban Poverty Municipal Finance Leaderships development Town Planning e-Governance Applications for ADB Project Managers from Mekong Region Right to Information Monitoring & Evaluation Social Audit

ADB

e-Governance

UNDP / DoPT-GoI DFID

Transparency Participatory planning

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Mapping of Local Network Institutions: Public Sector

Dr Marri Channa Reddy Human ResourceUrban Governance, Municipal Accounts & Development Institute of AP (State ATI) Budgeting, Revenue Management, Public Health and Sanitation Administrative (ASCI) Staff College of IndiaService Delivery, Programmes Management Development

Engineering Staff College of India (ESCI) Design & Infrastructure, Urban Services Regional Centre for Environmental Studies Urban &Urban Poverty, Accounts Management of Finances &

Environment Protection Training ResearchEnvironmental Planning, Techniques in SWM Institute (EPTRI), Hyderabad ICRA Management Consulting ServicesFinancial Management Limited (IMacs) Institute of Public Enterprise, Hyderabad Centre for Good Governance National Remote Hyderabad Sensing Service Delivery e-Governance, GIS, Accrual based Accounting Agency,GIS Applications

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Mapping of Local Network Institutions - Private Sector Lok Satta PRIYA CRISIL
Local Government Legislation Local Government Legislation Credit Enhancement

Institute of Chartered Financial Costing of Services Analysts of India (ICFAI), Hyderabad CII Indian School of Business, Hyderabad Dr. Reddys Laboratories
Private Public Partnerships Change Management, Public Sector Management Livelihoods
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Mapping of other Network Institutions

Kerala (i) (ii) (iii) (i) (ii) (iii) (i) Centre for Management Development, Trivandrum Kerala Institute of Local Administration (KILA), Trivandrum IMG, Trivandrum Indian Institute of Management, Bangalore ATI, Mysore Janagrahaa, Bangalore Anna Institute of Management, Chennai

Karnataka

Tamil Nadu

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GoB Studies
Treasury Rules Simple Financial M oral Rules

Pension Code A ccountable

RSystem esponsive IT Audit

T ransparent Budget Manual

Study S GPF MA RT

Internal Audit GOVERNMENT

Public Financial Management

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Modernization of Treasury Code of Government of Bihar

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Objective of the workshop

To refine the Bihar Treasury Rules with active participation of the participants

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Treasury Code-Genesis

During British rule, treasuries were set up with well laid down rules. The first treasury was established as early as 1794 Treasuries doubled as banks, held custody of valuables such as stamp paper, opium, etc. Today, a Treasury functions as a common service provider for receiving and making payments on behalf of government

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Purpose of Treasury
Treasury Code serves as a primary source of reference for the Treasury Officers. It deals with: internal controls in withdrawal, payment, custody of monies, etc. responsibilities of officers who receive and disburse money on behalf of government provides specimen forms in which bills have to be presented and returns to be furnished to various authorities

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Comparison of the codes of Different States

As a first step towards revision, Consultants have reviewed Treasury Codes of: West Bengal, Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra, Central Treasury Rules of GOI and Bihar Treasury Code. Contd

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CGG Team visited Karnataka and Maharashtra to study the working of treasuries in those States.

Bihar, Maharashtra and W.B. are similar while Tamil Nadu, Andhra Pradesh and Karnataka codes are largely similar

BTC has been commonalities with those of Maharashtra & WB

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Need for the revision

The Treasury Codes revised in Karnataka NA Maharashtra 1968 Bihar 1970 AP 1983 TN 1992 WB 2005

Outdated due to many changes that have taken place, particularly, a treasury does not carry out banking function anymore and due to computerization of its operations, it has also become an accounting unit

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Obsolescence of Rules

Many provisions in the treasury rules have become outdated due to changes that have taken place in the last four to five decades;

As the rules have not been revised keeping with the changes they are today accompanied by a large number of instructions / decisions

Sometimes the practices are at variance with rules

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The Current Task

The revision is done not only to update the existing rules but also to arrive at an ideal format for the code, the structure of which would enable easy reference to the rules

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Administration, Accounts and Computerization

Status of Control Treasuries Compilation Accounts by AG Bihar overFD ofPrimary Maharashtra DAT Primary W.B. DTA Primary T.N. DTA Secondary AP DTA Secondary Kar DoT Secondary

Computerization ofComputerized Computerized Computerized Treasury Functions Software isNIC hasIncluded in developed anddeveloped (Appendix-10). maintained bysoftware in DB.II NIC Web based software

Compilation ofComputerized &Computerized accounts. connected withcomputerized & TRAutomated DTA and Finance connected with Treasury Bill the DoT. passing system (ATBS) has been Uses Oracle data implemented in 2 base districts

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Methodology for Withdrawal of Moneys from the Government Accounts

Treasury/PAO PAOs Bihar No PAO Maharashtra West Bengal Cheque Drawing Cheque System Drawing Cheque Drawing Cheque Drawing TN Cheque Drawing Bill Drawing (Switched over to cheque drawing in 2 districts) Andhra Pradesh Cheque Drawing Karnataka Cheque drawing

District Treasuries Bill Drawing

Bill Drawing Cheque (Switched drawing over to cheque drawing in 2 districts)

Sub-Treasuries

Bill Drawing

Bill Drawing

No Sub Treasury

Bill Drawing Bill Drawing Cheque Drawing

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Changes made
the criterion whether a rule is laying down a lasting and stable principle or practice is adopted Notes, instructions including government decisions form an integral part of the Rules and are incorporated into sub-rules Lengthy rules divided as main rules and sub rules Rules modified and abridged in simple language Where repetition or similar rules they are integrated

Contd

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 Where a footnote or executive instruction or government decision only reiterates the already established rule, such references are dropped. Where any of them modifies the prevailing rule, it is incorporated into the rule. Executive instructions are given in the end of the Volume I relate to the period from 1998 onwards. The entire letter/note is reproduced instead of its gist. The gist of these instructions is incorporated in the relevant rules wherever necessary. Some instructions actually are in the nature of rules and naming them executive instructions is a misnomer. Such instructions are incorporated as rules.

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Suggested Methodology
To avoid duplication between treasury rules, financial rules and account code, it is proposed that where a BTR does not deal with either working of the treasury or about receipt or withdrawal of government money, but is more in the nature of instructions to government officers, such rules are deleted & provided in FR if they are already not included in it It is suggested that the Bihar Treasury Code be called Bihar Treasury Rules 2008 Revised BTC be only one book so that referring to Rules, forms and appendices is convenient

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Rule Referencing Methodology

Adopted 5 tiers as below. 1. Chapter 2. Section 3.Sub-section 4. Rule 5. Sub-rule or Note or Instructions

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Organization of Chapters
Existing Chapters 1 Introduction 1 Revised Chapters Introduction (Remove general principles and take them to relevant chapters) General Organization and Working of Treasuries Receipt and deposit of money into government account Deleted as it deals with non-banking treasuries which are not there anymore 4 Withdrawal of monies from government account Incorporated in relevant chapters Incorporated in relevant chapters Deleted (Taken it to chapter4) 5 6 Deposits Loans and Advances Deleted Deleted Deleted 7 Add - Inter governmental transactions

2 3 4 5 6 7 8 9 10 11 12 13

General Organization Receipt of Monies Custody of Monies Withdrawal of monies from government account Special Rules for banking treasury Special Rules for PWD, etc. Public Debt Deposits Loans and Advances Transfer of money Other remittances Executive Instructions

2 3

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Sub Treasury to mean Treasury

Expecting that GOB would continue the present practice of independent sub treasuries, Treasury is defined as including sub treasury.

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Deletion of Obsolete Provisions

All the Non Banking Sub Treasuries were converted into banking treasuries as a matter of policy by GoB rendering related rules in BTC obsolete West Bengal brought out new Treasury Rules in 2005 in which the said rules have been removed Changes made to Rules, Appendices, Forms of old BTC Chapter wise are in the coming slides.

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Chapter I
Name Topics dealt No. of rules No of forms No. of appendices No. of SG decisions No. of rules deleted Reasons for deletion : Introduction : Short title and commencement, definitions, Main rules relating to various chapters : 40 (1 to 40) : : 1 : 20 : 10 (5,6,8,11,30,36 to 40 : Conversion of non-banking treasuries into banking treasuries, Upgradation of sub-treasury into treasury and out-dated provisions : Nil : Nil : (Note below Rule3)

No. of forms deleted New rules added Best practices

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Chapter II
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion

: : : : : : : : : : :

General Organisation and working of treasuries General organization, Treasury accounts, inspection and Miscellaneous provisions 46 7 5 1 17 ( 54 to 59,61,62,65,66,72,74,81,81A,82,82A,84) Conversion of non-banking treasuries into banking treasuries, Upgradation of sub-treasury into treasury and out-dated provisions 6 ( BTC form 2 to 5,5A and 5B) Nil Monthly accounts to be signed by TO as in other States. Formation of Director Treasuries and Accounts prevalent in most of the States suggested Treasury

No.of forms deleted New rules addes Best practices adopted

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Chapter III
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: Receipt of Government Moneys and payment of such moneys

into the Public Account of the Province Govt. Account and granting receipt 32 4 Nil 5 21 ( 85 to87, 92 to 94,100,103,105 to 116)

: General rules, Procedure for paying & receiving moneys into : : : : : : : :

: non-banking treasury .&sub-treasury provisions

3 ( BTC forms 6,7 and 9) Nil

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Chapter IV
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: Custody of moneys relating to or standing in the Public

Account

: Cash in Departmental chests, Cash balance in treasuries

and verification of cash balance 19 4 Nil Nil 19 ( 117 to 135) treasuries. Nil Nil

: : : : :

: Conversion of non-banking treasuries into banking : : :

4 ( BTC forms 10 to 13)

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Chapter V
Name of Chapter Topics dealt with : Withdrawal from the Public Account : General rules, Personal claims of Government servants, Bills of Gazetted
Government servants, Bills of non-gazetted Government servants, Contingent servants, Pension payments, Payments of purchase of stores, Miscellaneous payment

No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: : : : :

301 (136 to446A) 54 12 Nil 87 (out of which 8 deleted)

: Non-banking treasury provisions, sub-tresury rules, BFR provisions and out-dated rules : : 22 Nil
System generated Cheque payments instead of sending bills to Bank suggested, Personal deposits period of closure reduced to items dormant for 2 consecutive years-rule modified

: Lapsed deposits refund-.Authorisation from AG not required-rule modified.

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Chapter VI
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted

: Special rules for Bank treasuries : Payment into Bank, Withdrawal from Bank, Daily accounts and
returns, Miscellaneous 35 1 Nil 7 15 deleted (447, 448, 450, 451, 453, 467 to 471, 477 to 481 Integrated into other chapters : Ch2- 6 rules, Ch3-2 rules and Ch4- 12 rules

: : : :

: Entire chapter removed-

Reasons for deletion No.of forms deleted New rules added Best practices adopted

: No need for separate chapter as all are banking treasuries : :

Nil Nil

: New appendix 8 on letter of credit added

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Chapter VII
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: Special rules applicable to particular departments : Public Works Dept, Forest Dept and Military Secretary to the
Governor 31 7 1 (Appendix 13) Nil Integrated in to new Ch3-8 rules; new Ch4-19 rules 7 Nil Nil

: : : :

: Entire chapter removed- deleted 4 (484, 488, 493 and 507) : Separate Chapter considered superfluous : : :

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Chapter VIII
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: Public Debt : Permanent and temporary loans, Floating debt and other
obligations 19 5 Nil Nil Government account

: : : :

: 19 integrated into new Chapter 4-Withdrawal from : Separate chapter not considered necessary : : :
2 ( BTC forms 70A and 72) Nil Nil

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Chapter IX
Name of Chapter Topics dealt with

: Deposit : Introductory, General rules, Revenue Deposits, Civil and

Criminal Court deposits, Personal deposits, Deposits for work done public bodies or individuals, Deposit under workmens compensation Act, Deposits of local funds, Special rules for particular local funds or classes of local fund 70 2 1 3 9 ( 534, 542, 551, 553, 556, 567, 571,5 81 and 587)

No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: : : : : : : :

: Non-banking treasury provision and out-dated rules.

Nil Nil Nil
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Chapter X
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: : : : : : : : : : :

Loans and advances General, Special rules applicable to different classes of loans and advances 12 1 (Form 48) Nil Nil Nil Nil Nil Nil Nil

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Chapter XI
Name of Chapter Topics dealt with No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: Transfer of moneys standing in the Public Account : Introduction, Transfer through currency, Remittances of
coin and notes 57 5 Nil Nil 57 ( 614 to 670) treasuries. Nil Nil

: : : : :

: Conversion of non-banking treasuries into banking : : :

5 ( BTC forms 77 to 81)

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Chapter XII
Name of Chapter Topics dealt with

: Other remittances through Government : Reserve Bank of India remittances, Record of drawing and
encashment, other rules and special rules for remittances of sepoys and policemen 42 1 1 2 42 ( 671 to 712) treasuries. Nil Nil

No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: : : : :

: Conversion of non-banking treasuries into banking : : :

1 ( BTC forms 82)

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Chapter XIII
Name of Chapter Topics dealt with

: Executive instructions : Introduction, Provision of funds at treasuries, currency

chests, Coin, Currency and bank notes, cipher code and treasury agencies 97 13 6 Nil 97 (717 to 813) treasuries. Nil Nil

No.of rules No.of forms No.of Appendices No.of SG decisions No.of rules deleted Reasons for deletion No.of forms deleted New rules added Best practices adopted

: : : : :

: Conversion of non-banking treasuries into banking : : :

6 ( BTC forms 22 to 27)

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Appendices
There are 27 Appendices in Bihar Treasury Code Five appendices viz. 23 to 27 are not printed relating to Coinage Rules of Reserve Bank of India as no NBSTs exist These appendices are no more required and hence deleted Deleted11 appendices from the remaining and added 3 appendices In the New BTR there are 14 Appendices

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Appendices Deleted
Sl. NO Old No. 1 2 6 7 Title of appendix. Questions for Sub inspections.( Rule75 ) divisional Remarks TreasurySince all sub treasuries are given the status of independent Treasuries,

List of Government servants authorized toIt is enough if it is mentioned in the Rule Drawing and draw bills except in the education andDisbursing Officer. Hence it is appropriate if the list is industries department. (Rule 137) appended to financial rules as this is nothing to do with the functions of treasury officer.. This also does not exist in WB Code List of authorized the officers who can sign and-docountersign bills in the education and industries department. (Rule 137). Contingent charges that requiredThis has nothing to do with the functions of treasury countersignature by superior officer. (Ruleofficer and it will be appropriate if taken to Financial 137). Rules. Further this does not find place in WB Code also. List of controlling officers for the purpose of-do-. the traveling allowance rules of the department or officers. (Rule 137). List of Proper Authorities for drawing and-docountersigning certain charges payable at subtreasuries.{Rule139 (b) }

10

11

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Appendices Deleted
Sl.NO Old No 7 14 Title of appendix. Remarks

Memorandum of instructions for deduction ofThis has nothing to do with the functions of treasury officer Income tax and Super tax from salaries, etc.and it is the responsibility of DDO to affect statutory ( Note 2 below Rule228 ) recoveries, therefore it will be appropriate if taken to Financial Rules. Further this does not find place in WB Code also. Rules made by Auditor-General for regulating-dothe preparation of last pay certificates in cases of transfers on duty, of or return from leave. (Note 2 below Rule 236 ) List of departments and undertakings recognizedDeleted as commercial and cases for authorized interdepartmental adjustments. Reserve Bank Of India remittances- remittancesSee Note 3 under Rule 672.Deleted as the rule itself deleted. on government account. Instructions to Treasury officers and Managers ofSee Note2 below Rules 735 &739. Deleted as the rule itself the State Bank of in charge of currency chests. deleted.

15

16

10 21 11 22

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Appendices Added
Sl.N o 1 New No. Gist of Appendix Letter of Credit System. Reasons for inclusion. Letter of credit system provisions available in Rule 461 are taken to Withdrawal of Moneys Chapter on revised Code. The instructions there under are kept in the Appendix.

2.

3.

Receipts Exempted from StampRule152 provides for exemption of Duty. certain receipts from stamp duty. The list there under is worth to be an appendix as in W B Code. Advise list/Register of PaymentGovernment decision 3 under Rule Orders. 313. It is found necessary to include decision as appendix.
49
Contd.,

Forms
There are109 Forms in BTC 52 Forms retained 57 Forms deleted 3 Forms required in Rules 80, 250 & 603 added In new BTRS 2008 there are 55 Forms

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Points for consideration of GOB

Signing of monthly accounts by the Treasury officer himself for sending them to AG Bihar Keeping the control of Treasury functions under separate HOD i.e. Director of Treasuries and Accounts As the cheques in respect of PWD & Forest departments are received in Treasury for enfacement the very bill payment functions be entrusted to Treasury Officer and should be made responsible for preparation of accounts and sending them to AG Bihar

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Thank You
Dr. Rajiv Sharma, IAS Director General Centre for Good Governance Dr. MCR HRD IAP Campus, Road No. 25, Jubilee Hills, Hyderabad, Andhra Pradesh (India) Tel. No.: (+91- 40- 23541952), Fax No. (+91- 40- 23541953) E-mail: dg@cgg.gov.in www.cgg.gov.in

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