Ministries, divisions: Bank accounts to be closed; funds to go to central account

KARACHI: Following the directives of the federal government, the State Bank of Pakistan (SBP) has asked banks to close all accounts of ministries and divisions and transfer the balance funds to the federal government’s central account with the SBP.

The federal government has recently promulgated Cash Management and Treasury Single Account Rules, 2020, which are applicable on all the government offices of Federal Government, ie, ministries, divisions, their executive departments, attached departments and subordinate offices. As per rules, the government offices will not open, operate or maintain a bank account in commercial banks for any purpose except under the authority of Finance Division and in accordance with section 31 of the Public Finance Act, 2019 and these Rules.

As per rules, Finance Division will facilitate all the government offices in efficient implementation of the Treasury Single Account system including assignment accounts in collaboration with State Bank of Pakistan and accounting offices.

Accordingly, the Finance Division, Government of Pakistan (GoP) vide their letter F.No.1(1)/S.O(TSA)/2020 dated 19th August 2020 has directed all Federal Government Ministries, Divisions, Attached Departments and Subordinate Offices (MDAS) to close their banks accounts with the commercial banks/financial institutions and transfer the balance funds to the Federal Government’s Central Account No.I (non-food) with the SBP.

According to SBP, as per following decision, respective bank branches will receive the ”Account Closure Request” from the respective authorized signatories on the specified format issued by Finance Division for closure of such bank accounts and transfer of balances therein to SBP.

Therefore, in line with the instructions of authorized signatories, the banks will close all such accounts and transfer their balances to SBP for onward credit to the Federal Government’s Central Account No.I (non-food).

In order to ensure closure of all the accounts and transfer of their balances to The SBP through a standardized procedure, banks are hereby advised to develop their internal applications and processes to keep track of the i). Receipt of directives by the authorized signatories; ii). Closure of accounts by banks’ branches and transfer of available balances to their centralized treasury and Transfer of the consolidated amount by the centralized treasury to the SBP through RTGS.

The SBP has directed banks that upon receipt of account closure request, the respective branches will initiate the closure of accounts and transfer the available balances to their centralized treasuries within seven (07) days through their internal application.

The respective branches will also convey the account details including names of Administrative/controlling ministries, names of Government Departments/Institutions, Account Titles, IBANs, Balances Transferred and Branch Code to their centralized treasuries, through standardized internal application.

The centralized treasury of each bank will transfer the aggregate amount of deposits surrendered by its branches on daily basis to SBP through RTGS Message Type (MT-202) for onward credit to the Federal Government’s Central Account No.I (non-food). The MT-102 will invariably mention reference phrase “Government Deposit Transferred to Central Account-I (non-food)”.

The banks’ centralized treasuries will forward the details of such closed accounts to SBP Banking Services Corporation (BSC) Karachi Office.

Copyright Business Recorder, 2020