INTRODUCTION TO PFMS

(PUBLIC FINANCIAL MANAGEMENT SYSTEM)

• PFMS is implemented by O/o CGA under Ministry of Finance,
Department of Expenditure
• It is a Web based online transaction system for Fund Management and
E-payment for Implementing Agencies
• It was started during the FY 2008-09 as CPSMS (Central Plan Scheme
Management System) as pilot project in the states of MP, Bihar, Punjab
and Mizoram for 04 Schemes, MGNREGA, NRHM, SSA and PMGSY,
with an objective for tracking funds released under Plan schemes of
GOI and real time reporting of Expenditure at all levels of Programme
implementation.
• Later, the scope enlarged to cover direct payment to beneficiaries
under all schemes.
• Further, it was extended to more financial activities of GOI through
PFMS
• During the Year 2013, PFMS is rolled out in all the states.
• Today, primary function of PFMS is efficient fund flow as well as
payment and Accounting network.
• PFMS is integrated with Core Banking System in the Country. Almost
all the Banks in the Country, including PSBs, Rural Banks, major
Private Sector Banks, RBI, India Post and Co-operative Banks are
integrated with PFMS. Every Bank Account added in PFMS first gets
validated in CBS and then only pushes for online payments.
 PFMS - A 03 Tired Organisation Structure

PIC – Project Implementation Committee at apex level

CPMU – Central Project Management Unit at Central Level
SPMU – State Project Management Unit at State Level

PIC

CPMU

SPMU
 Types of Schemes implemented through
PFMS
Central Sector Schemes (CS): CNA/TSA (01/04/2022)(OM Dt 09/03/2022)
These are the schemes that are implemented by a Central Agency
and 100% funded by the Center on subjects within the union list.
Ex : MPLADS, PM EGP, LPG Connection to poor, Scholorship to College and
University Students etc.
Central Sponsored Schemes (CSS): SNA (01/07/2021)(OM Dt 23/03/2021)
These are the Schemes that are implemented by State Governments but
are largely funded by the Central Government with a defined state government
share.
Ex : SBM, NHM, PMGSY, PMAY, Mid day meals in Schools etc.
 Pre-requisites for implementation of CNA/TSA/SNA Schemes

• Open Bank Accounts by CNA/SNA in RBI/Commercial banks

• Mapping of Bank Accounts with CNA/SNA in PFMS portal
• Open Holding Accounts for parking of Statutory deductions and
further payments
• Mapping of Scheme Hierarchy in PFMS portal
• Mapping of Components in PFMS portal
• Budget Head Mapping
• Creation of Agency Admin Login Credentials
 Different Modules for making payments in PFMS

1. EAT Module (Expenditue/Advance/Transfer)

2. DBT Module (Direct Benefit Transfer)

3. SPARSH Module
ONBOARDING OF CNA/TSA SCHEME IN PFMS
GOVT. OF INDIA

4 DIGIT Centre Code

with Scheme Name

Programme
Division

Registers 1st
Level Agency in
PFMS

Child Child
Agency 1 Agency 2
 FUND FLOW FOR CNA/TSA
MINISTRY
(PD)
SANCTION to PAO

CNA/TSA

IA I IA II IA III
Drawing limits Drawing limits Drawing limits
 Pre requisites for onboarding of CNA
• The scheme should marked as Central Sector scheme.
• The Program Division (PD) has to be identified the scheme to be in
Model 1 or 2 as per DoE’s guidelines.
• Notification of CNA and of the Sub Agencies (SA) by the concerned
Program Division (PD) of the Ministry.
• Opening of Central Nodal Account of the CNA.
• Opening of Zero balance accounts of SAs in the same Scheduled
Commercial Bank/RBI in which CNA account is opened.
 IMPLEMENTATION OF TSA/CNA MODELS
• Model 1 (M1): M1 is the TSA model. It is implemented through
Treasury Single Account (TSA). The TSA Account is to be opened in
RBI. It is applicable to CS schemes having annual outlay of more than
Rs. 500 crores and implemented without involvement of State
Agencies.

• Model 2 (M2): M2 is non-TSA Model. It is implemented through

Scheduled Commercial Banks and is applicable to CS Schemes having
annual outlay of less than Rs. 500 crore or to the CS schemes
implemented by the agencies of the State Governments exclusively or
in addition to the Central agencies.
 Procedure for flow of funds in Central Sector
Schemes (Model 1)(TSA)
• Identifying Central Nodal Agency (CNA) and mapping in PFMS
• Opening of Bank Account by CNA in RBI and mapping in PFMS
• Identifying the Implementing Agencies and mapping in PFMS
• Opening of Bank Account by Implementing Agencies in RBI and mapping in
PFMS
• All these accounts in RBI will be "Assignment Accounts". A limit up to which
expenditure can be incurred by the CNA/ sub-agencies shall be assigned to
these accounts from time to time by the Pay and Accounts Office (PAO)
concerned Ministry/Department through PFMS
• Unutilized assignments will lapse at the close of the Financial Year and will
not be available to the CNAs /SAs for expenditure in the next financial year.
In PFMS too, all assignments/sub assignments Shall cease to exist after the
close of financial year and shall be flushed out from the system
 Procedure for flow of funds in Central Sector
Schemes (Model 2)
• Identifying Central Nodal Agency (CNA) and mapping in PFMS
• Opening of Bank Account by CNA in RBI/Scheduled Commercial bank and mapping in
PFMS
• Identifying the Implementing Agencies and mapping in PFMS
• Opening of ZBSA Accounts by implementing Agencies in same bank of CNA (may be in
Different Branches) and mapping in PFMS
• Setting up of drawing limits for Implementing Agencies by CNA
• Release of funds to CNS as per Rule 230(vii) (unspent balance) and Rule 232(v) (Release
of funds) of GFR 2017
• Remittance of Interest earned on Bank account of CNA to be remitted to Consolidated
Fund of India as per Rule 230(8) of GFR 2017
• Mapping of Vendors/Beneficiaries in PFMS for making payments.
• Use EAT modules of PFMS of integrate any other system in PFMS
 Rule 86 - Public Financial Management System (PFMS)

(1) Public Financial Management System (PFMS), an integrated Financial

Management System of Controller General of Accounts, Government of
India, shall be used for sanction preparation, bill processing, payment,
receipt management, Direct Benefit Transfer, fund flow management and
financial reporting.
(2) All the ministries sanctioning grant-in-aid shall register all implementing
agencies till last level of implementation on PFMS to track fund flow and
unspent balances.
(3) All the payment, to the extent possible, shall be released ‘just-in-time’ by
the Ministries through PFMS.
(4) Detailed Demand for Grants (DDG), as approved, must be uploaded on
PFMS at the start of each Financial Year.
(5) All the re-appropriation orders, surrender order shall be generated
through PFMS system.
(6) All grantee institutions shall submit Utilization Certificates on PFMS.
• Rule 232(v) – Release of Funds - The release of funds to State
Governments and monitoring further utilization should be
undertaken through PFMS.
The Ministries or Departments should establish a mechanism to
ensure that the funds earlier released have been effectively utilized and
that the data and facts reported by the State Governments or Union
Territories relating to physical and financial performance are correct.
Before releasing further funds, it should also be ensured that the State
Governments or Union Territories have the capacity to actually spend
the balance from the previous years and the releases during the
current year.
Rule 230 (7) Unspent Balances: When recurring Grants-in-aid are sanctioned
to the same Institution or Organization for the same purpose, the unspent
balance of the previous Grant should be taken into account in sanctioning
the subsequent Grant.
For this purpose, the Program Division of Ministries/Department shall
take help of PFMS Portal to know the bank balance of the recipients before
making each release. The instructions of Department of Expenditure
regarding the use of PFMS Portal for Central Sector Schemes issued from
time to time shall be strictly followed by all Ministries/ Departments. The
principles of ‘just in time release’, should be applied for releases in respect of
all payments to the extent possible. The following broad principles shall be
adhered to: (i) Cash balance at a time should preferably not be more than 3
months of requirements (ii) Funds should be released as per actual
requirements and that sanction may precede the release of funds, though its
validity may be limited to that financial year.
Rule 238 (1) -Utilization Certificates : In respect of non-recurring
Grants to an Institution or Organization, a certificate of actual
utilization of the Grants received for the purpose for which it was
sanctioned in Form GFR 12-A, should be insisted upon in the order
sanctioning the Grants-in-aid.

The Utilization Certificate should be submitted within twelve months of

the closure of the financial year by the Institution or Organization
concerned. Receipt of such certificate shall be scrutinized by the
Ministry or Department concerned. Where such certificate is not
received from the Grantee within the prescribed time, the Ministry or
Department will be at liberty to blacklist such Institution or
Organization from any future grant, subsidy or other type of financial
support from the Government.
 ONBOARDING OF SNA SCHEME IN PFMS
GOVT. OF INDIA 4 DIGIT Centre Code Program
State Finance
with Scheme Name Division
Department

SNA Agency State Scheme

Admin Manager

Child Child
Agency 1 Agency 2
 FUND FLOW FOR SNA
MINISTRY (PD)

SANCTION to PAO

State Treasury(SFD)

SNA

IA I IA II IA III
Drawing limits Drawing limits Drawing limits
 Main Activities to be done in PFMS

1. Agency registration.
• Central Nodal Agency / Parent agency registration is done by PD in Ministry as Admin for CS Scheme
• State Nodal Agency/Parent agency registration is done by SSM as Admin for CSS Schemes
• Next level child agencies are registered by the Admin of their funding agency
• Each child agency is approved by the Admin of its selected funding agency .

2. Expenditure filing module:

Filing of day to day expenditure/grant of Advances to Vendors

3. Payment module:
▪ Signed Print Payment Advice (PPA)
▪ Digital Signature Certificate (e-Payment)
Agency admin Role
➢Scheme configuration
➢Creation of Maker(Data Operator)
➢Creation of Checker (Data Approver)
➢Activation payment(PPA/E-payment mode)
➢Child Agency registration
➢Child Agency mapping
➢Assigning limits to child agencies
➢Approval of enrolled DSC for E-payment
➢Signatory configuration
 Date Operator Role

➢ Vendor Creation (Single and Bulk)

➢ Expenditure Filing (Preparation of Bills)
➢ Transfer any Deductions made in Bills to
Holding Account
➢ Interest Transfer to Holding Account
➢ Settlement of Deductions and Interest
amounts
 Data Approver Role
➢ Enrolment of DSC
➢ Approve/Reject Expenditure File (Bills)
➢ Approve/Reject Deductions transfer to Holding
Account
➢ Approve/Reject Interest Transfer to Holding
Account
➢ E-payment through DSC/ Generate Print Payment
Advice (PPA) for submitting to Bank
➢ Approve/Reject Settlement of Deductions and
Interest amounts
 EAT Module
• EAT Module is also called as Expenditure Filing Module.

• E stands for Expenditure filing :

It is the process of feeding/entering the day-to-day expenditures, as
recorded in the cash book, on the PFMS portal by an agency registered in
PFMS.
• A stands for Advance.
Advance payment is made to a vendor or supplier for getting a service or
product. An advance is also given to an official for getting a work done.
Once the intended work is completed, the beneficiary/vendor/supplier will
submit the voucher and the advance is settled.

• T stands for Transfer.

An Implementing Agency can transfer funds to the lower level agencies.
Create Expenditure Details
• 1.select Scheme Name
• 2.Select in to Bank Account
• 3.if you transfer Vendor then We will select vendor
• 4 if you transfer Beneficiary then We will select Beneficiary
• 5 add Scheme component click in to scheme component select bulk
 DBT MODEL
• In DBT Model, payments will be credited to the Beneficiaries directly
to their Bank Accounts. For Example:

• Payments to Student Scholarships

• Asha Worker Salaries
• Farmer Subsidy
• Old Age pensions
Utilization Certificate
 SPARSH
SPARSH is an attempt to apply the TSA framework in disbursement
under Centrally Sponsored Schemes for more effective cash
management and with an aim of achieving the goal of “Just–in–time”
fund flow from both the Centre and State Consolidated Funds. This
new system will use PFMS, State IFMIS and the e-Kuber platform if
Reserve Bank of India.
 Advantages of SPARSH
• To bring in more efficiency in public expenditure management
• Reduction in the transfer of balances outside the Consolidated Fund of India
and States
• Preventing bulk release to SNAs by both the Centre and the States
• Reducing the dependency of States on Ways and Means Advance (WMA) or
other short-term borrowings for maintaining liquidity
• Averting idling of funds in the bank accounts of the SNAs until final
utilization.
 Stakeholders of SPARSH
Programme Division
o Approve Centre: State ratio mapping, SG account mapped against SLS by SSM
o Issue the ‘Mother Sanction’ through PFMS
o Generate a daily sanction against the mother sanction
o Ensure that the overall ceiling of the mother sanction is maintained while
issuing the daily sanction
Pay and Accounts Office
o Map CSS with RBI account.
o Issue an e-payment instruction to the e-kuber based on the daily sanction against the e-
payment file received from State IFMIS on PFMS.
 Pr. Accounts Office

o Generate an e-payment instruction to be sent to the e-kuber based on the daily sanction against the e-
payment file received from State IFMIS on PFMS

Reserve Bank of India

o Opening of the Central Government (CG) and State Government (SG) Drawing Accounts.
o Process the e-payment file
o Share Debit Notification with PFMS
 IFMIS

o Open SLS-wise drawing accounts with the RBI

o Push the SLS-wise consolidated payment file details to PFMS
o Auto-push e-payment file to the RBI PFMS through API of the Centre’s drawing account.
o Reconcile the e-payment files

State Directorate
o State Project Cell will map the CSS with SLSs as per the existing protocol.
o Map SLS with State Government (SG) RBI drawing account
o Mapping of Heirachy and Components
 Process Flow for SNA-SPARSH - State IFMIS – e-Kuber(RBI) – PFMS

PFMS

XML file Acts as a state-wise budgetary Mother Sanction

pushed ceiling for each CSS scheme
STATE IFMIS Multiple can be created but only
through API
one will be active at a time
in Jason
Balance of mother
format for
sanction reduced
release of
E-payment file generated Centre Share Daily Sanction
PD USER Generates sanction based
with beneficiary details on the XML file from State
and sent to State IFMIS (equivalent to
IMPLEMENTING Treasury center’s share) An amount equivalent to
the generated daily
AGENCY 1 sanction credited

IMPLEMENTING STATE TREASURY

AGENCY 2 Generates consolidated
e-payment (XML) RBI
IMPLEMENTING DN sent
to PFMS
AGENCY 3 XML file Debit
digitally Notification sent
to State IFMIS State’s Drawing Account
signed and Center’s Drawing
stored (pre-funded with Center’s
Debited for Account
share)
Centre’s
Internal Server
share
Payment
disbursed
XML file pushed to RBI for DN for State drawing account sent to PFMS
DN for State drawing payment (both Center and
account sent to State share
IFMIS BENEFICIARY 36