ISLAMABAD: Ministry of Finance (MoF) has requested all commercial banks to close accounts of federal government entities having zero balances, official sources told Business Recorder.
Sharing the details, sources said under Article 78 of the Constitution all revenues, the loan receipts and all other money received by or on behalf of the Government of Pakistan (GoP) are either part of the Federal Consolidated Fund (FCF) or the Public Account of the Federation (PAF). The cash balances of both FCF and PAF are maintained in the Central Account No-I (non-food) at the State Bank of Pakistan (SBP).
Under the Public Finance Management Act (PFM), 2019, the operations of the FCF and PAF vest in the Finance Division, GoP. The legislation also requires vide section 23(2) that no authority shall transfer public money for investment or deposit from government account to other bank accounts without prior approval from the Federal Government.
According to the Finance Ministry, the Federal Government has since notified Cash Management & Treasury Single Account Policy 2019-29, Cash Management and Treasury Single Account Rules, 2020, whereby under Rule 4 (1) “no Government office shall open, operate or maintain any bank account for any purpose except in accordance with the PFM Act and these rules”. Rule 4 (3) further provides that “any approval granted by Finance Division prior to commencement of these rules, for opening of bank accounts in scheduled banks by government offices stand revoked on commencement of these rules. The accounts already opened shall be closed and balances if there any transferred to Federal Consolidated Fund”.
Ministry stops PSEs from depositing funds in private banks
In a letter to all the Federal Secretaries (including Secretary Defence)/Principal Accounting Officers (PAOs), Finance Ministry has stated that in order to implement the available provisions, procedure has been framed in consultation with State Bank of Pakistan and international development partners, adding that with a view to consolidate the cash balances of the Federal Government, the Finance Division has collected information of all the accounts maintained by Federal Government Entities through SBP. After analysis of this information, it has been established that thousands of the Zero Balance Accounts (ZBAS) in scheduled commercial banks are inoperative and zero balance accounts exist.
Now, Finance Division has requested relevant banks through SBP to close all commercial bank accounts relating to Federal Government Entities having Zero Balances. The implementation is in process, the sources quoted Finance Ministry as saying in its letter sent to all the Federal Secretaries/ Principal Accounting Officers.
Copyright Business Recorder, 2022