Government Business for Bank

1. Government Business

RBI’s Role in Government Transactions

• Banker to the Government under the RBI Act:
  • Section 20: Manages receipts, payments, and public debt of the Central Government.
  • Section 21: Conducts business for State Governments.
  • Section 21A: Agreements with State Governments (except Sikkim).
• RBI operates through:
  • Public Accounts Departments.
  • Authorized branches of agency banks (e.g., ICICI, HDFC, Axis).
• Principal Accounts of Central and State Governments maintained at RBI’s Central Accounts Section in Nagpur.

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Agency Commission (as of July 1, 2019)

Type of Transaction	Unit	Rate
Receipts (Physical Mode)	Per transaction	Rs. 40/-
Receipts (E-mode)	Per transaction	Rs. 9/-
Pension Payments	Per transaction	Rs. 75/-
Payments (Other than Pension)	Per Rs. 100 turnovers	Rs. 0.065%

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Benefits of Government Business for Banks

1. Increase in CASA deposits.
2. Fee-based income from handling transactions.
3. Float income for better liquidity.
4. Opportunities for cross-selling products like loans, insurance, and investments.

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2. Pension Management

Central Civil Pension

• Handled by CPPC (Central Pension Processing Cell):
  • Processes payments and arrears.
  • Stops payments upon notification of death.
  • Restores commutation deductions after 15 years.
• Key requirement: Annual Life Certificate submission.
  • Regular Pensioners: 1st Nov – 30th Nov (valid until 31st Oct next year).
  • Super Senior Pensioners (80+): 1st Oct onwards.
  • Digital Life Certificate (DLC) via Aadhar introduced in 2014.

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Family Pension

• Provided upon the death of the pensioner.
• Requires:
  • Death certificate.
  • Family Pension Application Form.
• Enhanced pension rate applicable for 7-10 years (death-in-harness cases).

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Defence Pension

• Similar rules to Central Civil Pensions.
• Documentation required varies by rank:
  • Civilians: PPO, identification, provision certificate.
  • Commissioned Officers: PPO, identification document.

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State Government Pension

• Since July 1, 2022: Managed centrally by CPPC Gandhinagar.
• Branches coordinate with CPPC for grievances, new pensions, and revisions.

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3. Specific Pension Types

Pension Type	Special Features
Defence Pension	Follows Central Civil Pension guidelines.
Railway Pension	Managed by Financial Adviser (FA) and Chief Accounting Officer (CAO).
Telecom Pension	Handled by public sector banks from Feb 8, 1991.
Swatantra Sainik Pension	Includes complimentary railway passes.

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Key Definitions and Terms

• PPO (Pension Payment Order): Document authorizing pension payment.
• CPPC (Central Pension Processing Cell): Handles pension processing and grievance redressal.
• Agency Commission: Fee paid by RBI to banks for managing government business.
• DLC (Digital Life Certificate): Aadhar-linked online life certificate submission.

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4. Amendments and Updates

1. e-PPO Implementation (Railways):
   • Data digitally signed and transferred to banks for direct pension disbursement.
2. Dependent Family Pension Review:
   • Income cap: Rs. 20,000/month or Rs. 2,40,000/year.
   • Income from employment, business, or own pension included.
3. Centralized Pension Handling:
   • From July 2022, all State Government pensions routed via CPPC Gandhinagar.

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5. Exam-Ready Facts

1. RBI handles State Government transactions except Sikkim.
2. Life Certificate submission for super seniors starts October.
3. Agency commission for e-mode receipts: Rs. 9/- per transaction.
4. Enhanced family pension lasts 7-10 years depending on circumstances.

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