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F. No. 1(18)/PFMS/FCD/2021
Government of India
Ministry of Finance
Department of Expenditure

North Block, New Delhi

Dated : 9th March, 2022
OFFICE MEMORANDUM

Subject: Revised procedure for flow of funds under Central Sector Sch ernes

In supersession of all previous orders issued by the Department of Expenditure,

Ministry of Finance regarding release of ftinds under the Central
Sector Schemes, the
following procedure shall be followed w.e •f 1st April, 2022 by the Ministries/ Departments
of Government of India for flow of funds under the Central Sector Sch
ernes and monitoring
utilization of funds released.

Model - 1 : Implementation through Treasury Single Account (TSA)

In case ot Central Sector Schemes having annual outlay of more than Rs 500
crores
and implemented without involvement of State agencies, it shall be mandatory to
implement such schemes through the Treasury Single Account (TSA)
model. This will
ensure that the funds of these schemes are released “Just-In-Time” from the Consolidated
Fund of India (CFI) to the beneficiaries/vendors. The Ministries/Departments may opt for
Model-1 for other Central Sector Schemes too in consultation with RBI. For the schemes
implemented through this model, the following procedure shall be followed by the
Ministries/Departments :

For each Central Sector Scheme, the concerned Ministry/Department will

designate an Autonomous Body as the Central Nodal Agency (CNA) to
implement the scheme.

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n. If there are other agencies involved in implementation of the scheme down the
ladder, which get funds from the CNA, these Implementing Agencies (IAs) will
be notified as Sub-Agencies (SAs) of the CNA.
in. Each CNA will open an account with the Reserve Bank of India (RBI) in e-
Kuber. Even in cases where CNA is already registered in the TSA module and
has a bank account in e-Kuber for some other grant, it will open separate account
in e-Kuber for funds to be provided under each Central Sector Scheme.
iv. The SAs of every CNA will also open scheme-wise bank accounts with RBI in
e-Kuber in line with the requirements of para (iii) above.
v. The relevant details of all the accounts of the CNA and SAs opened with RBI
shall be mapped in the TSA module of PFMS as per the extant guidelines on
TSA.
vi. In respect of funds of Central Sector Schemes, the CNA and SAs shall not
open/operate/ park funds in any other bank account except under the provisions
made in these guidelines.
vn. RBI will function as the primary banker to the Ministries/ Departments in this
regard without involvement of an agency bank.
vm. 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
through PFMS.
ix. Assignment will be based on an expenditure sanction issued by the Programme
Division (PD) and the bill preferred by the Drawing and Disbursing Officer
(DDO). The e-format of the assignments and Sub-assignments shall have
requisite details required for accounting and reconciliation of transactions. The
e-Kuber bank account details of the CNA/SAs shall be incorporated in the
sanction order.
x. Consequent upon receipt of the sanction order for release of funds to the CNA
alongwith bills from the Drawing and Disbursing Officer (DDO), the concerned

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Pay and Accounts Officers (PAOs) shall, through assignments, advise RBI, after
exercising all necessary checks, to honour the payment instructions issued by
the concerned CNA/SA up to the, “assigned limit” in the advice.
xi. The PAO shall debit the concerned Head of Account for appropriation but not
transfer the cash directly to the CNA. It shall be retained in an interim account
in respect of the CNA listed under the parent Ministry/ Department in the public
account.
xn. The assignments shall be uploaded on the TSA module and received
electronically by the CNAs as per the existing protocols of TSA module. The
CNA may issue e-Sub-assignments in PFMS against this assignment setting
limits of expenditure for the SAs.
xm. CNAs & SAs shall adhere to all due process while incurring expenditure from
the assignment limit sanctioned through PFMS. CNAs shall also ensure that
sufficient limit is available in the relevant account before issue of assignment to
SAs.
xiv. The system will be digital and fully online on PFMS with no physical flow of
assignments to RBI or expenditure by CNAs/SAs on assignment basis. The
electronic file containing a unique sanction ID and necessary details of the
sanction order will travel directly from PAO to RBI and concerned CNAs. RBI
will maintain individual ledgers in respect of the accounts of the CNAs for
watching the availability of assignment.
xv. PFMS Division in CGA will design requisite reports to enable all Program
Division (PDs), Pay & Accounts Officers (PAOs), and other stakeholders to
view details of sanction orders, summary and budget balance of
assignments/sub-assignments, and expenditure details.
xvi. Ministries/ Departments administering the schemes concerned should strive to
make realistic estimation of Budget under the Central Sector schemes and issue
sanction orders according to actual requirements. The savings in the assignments
should be anticipated well in advance particularly in the third quarter of

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Financial Year and Ministries/Departments shall ensure suitable

savings/surrenders are informed to Budget Division during the pre-budget
meetings.
xvn. Control of limits shall be at the Standard Object Head level.
xvm. Unutilized assignments will lapse to the Government at the close of the Financial
Year as per the extant norms of Budget execution and will not be available to
the CNAs /SAs for expenditure in the next financial year. In PFMS too, all e-
assignments/e-sub assignments shall cease to exist after the close ot financial
years and shall be flushed out from the system as per the current practice in TSA
module.
xix. In respect of some transactions like payment of TDS, Income Tax and GST,
Opening of Letter of Credit in favour of foreign suppliers, scholarships to foreign
students not having account in India, and payment of salaries of the month of
March to be paid in 1st week of April, CNAs/SAs may utilize the services of
their existing account at commercial banks. They may transfer funds “just in
time” to the extent required for meeting such transactions. However, in no case
the money transferred under this provision will be parked in a Commercial Bank
beyond a period of two weeks.
xx. Unutilized amount of past releases under the scheme available in the bank
account of CNA & SAs shall be deposited in the Consolidated Fund of India.

Model -2: Implementation through scheduled commercial banks

3. In case of Central Sector Schemes having (a) annual outlay of less than Rs 500
crores or (b) the schemes are being implemented by agencies of the State Governments
exclusively or in addition to the central agencies or (c) other schemes not covered in Model-
1, the following procedure will be followed by the Ministries/ Departments :

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(i) Every Ministry/ Department will designate a Central Nodal Agency (CNA) for
implementing each Central Sector Scheme. The CNA will open a Central Nodal
Account for each Central Sector Scheme in a scheduled commercial bank
authorized to conduct Government business by the Ministry/ Department
concerned.
(ii) Implementing Agencies (IAs) down the ladder will be designated as Sub-
Agencies (SAs). The SAs will use the CNA’s accounts with clearly defined
drawing limits set for that account. However, depending upon operational
requirements, zero balance subsidiary accounts for each scheme may also be
opened by the SAs.
(iii) All zero balance subsidiary accounts will have allocated drawing limits to be
decided by the CNA concerned from time to time and will draw on real time
basis from the Central Nodal Account of the scheme as and when payments are
to be made to beneficiaries, vendors etc. The available drawing limit will get
reduced by the extent of utilization.
(iv) For seamless management of funds, the main account and all zero balance
subsidiary accounts should be maintained with the same bank. However,
Ministry/ Department may choose different banks for opening Central Nodal
Accounts of different Central Sector Schemes.
(v) Only banks having a robust IT system and adequate branch network should be
chosen for opening Central Nodal Account and the zero balance accounts of SAs
of each Central Sector Scheme. The bank chosen should have the facility to open
the required number of subsidiary zero balance accounts and a robust MIS for
handling accounting and reconciliation at each level. The bank should also
provide necessary reports and a user-friendly dashboard to officers at various
levels to monitor utilization of funds by SAs.
(vi) The bank’s software system should be able to monitor the drawing limits of the
SAs who should be able to draw funds on real time basis from the CNA’s
account as and when payments are to be made. The selected bank should ensure

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proper training and capacity building of branch managers and other staff for
smooth operation of these accounts.
(vii) Ministries/ Departments will release the scheme funds for each Central Sector
Scheme to the account of CNA concerned strictly on the basis of requirement,
keeping in view the balance funds of the scheme available with the CNA as per
PFMS or scheme-specific portals fully integrated with PFMS in consonance
with Rule 232(v) and 230(vii) of the General Financial Rules, 2017.
(viii) The Ministries/ Departments and the CNAs shall ensure that the interest earned
from the funds released is mandatorily remitted to the Consolidated Fund of
India in terms of Rule 230(8) of GFR. 2017. The interest component shall be
distinctly reflected in the MIS provided by the banks.
(ix) The Ministries/ Departments shall release the funds as far as possible in ‘Just-
In-Time’ manner keeping the float in CNAs account to the minimum possible
and shall in no case release more than 25% of the amount earmarked for the
scheme in a financial year at a time. Additional funds (not more than 25% at a
time) will be released only upon utilization of at least 75% of the funds released
earlier and in compliance with the conditions of previous sanction.
(x) For administrative convenience and efficiency the Program Division may obtain
approval of the competent authority and concurrence of the Financial Advisor
for more than 25% at a time. But release of funds shall not exceed 25% in one
instalment.
(xi) After opening of Central Nodal Account of the scheme and before opening zero
balance subsidiary account of SAs or assigning them drawing rights from CNA’s
account, the SAs at all levels shall return all unspent amounts of the scheme
lying in their accounts to the Central Nodal Account of the CNA.
(xii) It will be the responsibility of the Ministry/ Department concerned to ensure that
the entire unspent amount of the scheme is returned by all the SAs to the Central
Nodal Account of the CNA concerned before releasing funds to CNAs.

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(xiii) Ministries/ Departments will ensure that releases under all Central Sector
Schemes are made strictly as per the actual requirement on the ground, without
resulting in any material float with the implementing agencies at any level.
(xiv) Ministry/ Department will register the CNAs and all SAs on PFMS and use the
unique PFMS ID assigned to the CNA and SAs for making all payments to them.
Bank accounts of the CNAs, SAs, vendors and other organisations receiving
funds will also be mapped in PFMS.
(xv) Payments will be made from the zero balance subsidiary accounts up to the
drawing limit assigned to such accounts from time to time. Transactions in each
Subsidiary Account will be settled with the Central Nodal Account daily through
the core banking solution (CBS) on the basis of payments made during the day.
(xvi) CNAs and SAs will mandatorily use the EAT module of PFMS or integrate their
systems with the PFMS to ensure that information on PFMS is updated by each
SA at least once every day.
(xvii) CNAs will keep all the funds received in the Central Nodal Account only and
shall not transfer the funds to any other account or not divert the same to Fixed
Deposits/ Flexi-Account/ Multi-Option Deposit Account/ Corporate Liquid
Term Deposit (CLTD) account etc. The funds released to CNA shall not be
parked in bank account of any other agency.
(xviii) Release of funds by the Ministries/ Departments towards the end of the financial
year should be avoided to prevent accumulation of unspent balances with CNAs.

4. UTs without legislature work directly in PFMS and should be given Letter of
Authorization (LoA). There is no need for them to open a Central Nodal Account. They
will ensure that the funds are released on the basis of LoA to the vendors/ beneficiaries
‘Just-In-Time’.

5. Secretaries are requested to, and Financial Advisors of Ministries/ Departments

shall, undertake monthly review of strict implementation of these guidelines, opening of

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accounts in RBI, issue of authorization or release of funds to the CNA, utilization ot funds
by CNAs and IAs and outputs/ outcomes vis-a-vis the targets of each Central Sector
Scheme.

6. Gradually, schemes in Model-2 are expected to move to Model-1 depending on

readiness of RBI and Ministries for which necessary orders will be issued separately by the
Department of Expenditure.

7. The following categories of Central Sector Schemes will be exempted from

following these guidelines and may continue in existing mode:

(i) Central Sector Schemes being implemented by Ministries/ Departments in Direct

Benefit Transfer (DBT) mode or reimbursement mode.
(ii) Central Sector Schemes involving payment of equity share or extension of loan
by the Government to a company.
(iii) Central Sector Schemes where 100% payments are made by the
Ministry/Department directly to the vendors/beneficiaries against the bills/claims
raised by the vendors/beneficiaries.
(iv) Central Sector Schemes where funds are transferred by the Ministry/Department
directly to multiple Implementing Agencies (IAs) and amount transferred to any
agency does not exceed Rs. 10 lakhs per annum.
(v) Central Sector Schemes in which funds are transferred to the Indian Missions
abroad for implementation of the scheme.
(vi) Central Sector Schemes being implemented exclusively from a corpus/revolving
fund approved by the Cabinet.
(vii) Central Sector Schemes where expenditure is based on authorization and is
incurred on real time basis with no float. However, in such cases
Ministry/Department shall avoid the mode of transfer of funds through Civil
Deposit and the option of Letter of Authorization should be adopted.

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8. In cases where there is no Central Autonomous Body in a Ministry/Department or

where the Ministry/Department wishes to implement the scheme directly through State
Government agencies, such State Government agency will be designated as CNA.
However, there shall not be more than one CNA per State. The funds in such cases will be
released by the Ministry/Department to the CNA directly and not through state treasury

9. An illustrative list of roles and responsibilities of CNAs is given in Annexure-I.

10. This issues with the approval of Finance Secretary & Secretary (Expenditure).

(Abhay Kumar)
Director
Tel. No. 24360647

To

1. Secretaries of all Ministries/Departments of Government of India

2. Chief General Manager, Reserve Bank of India, Department of Government and
Bank Accounts
3. Controller General of Accounts, Department of Expenditure, INA, New Delhi
4. Financial Advisers of all Ministries/Departments of Government of India
5. Additional CGA (PFMS), O/o CGA with the request to take immediate steps for
carrying out necessary change in PFMS and designing requisite reports.
6. Additional CGA (GBA), O/o CGA with the request to take necessary steps to
implement model 1 of the Guidelines.
7. All Principal CCAs/CCAs of Ministries/Departments
Copy to:
1. Chief Secretaries of all States/Union Territories
2. Principal Secretary Finance of all States/Union Territories
Copy for information:
1. PSO to Secretary (Expenditure)
2. PSO to Special Secretary (Pers.)
3. Sr. PPS to AS (PFC-II)
4. Sr. PPS to AS (PF-S)

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Annexure

Role and Responsibilities of CNA

Modified Fund Flow Guidelines for Central Sector Schemes

1. Model 1 - Treasury Single Account (TSA) Model

a. Open Account with RBI in e-Kuber for each scheme under which it receives
grant
b. Mandatorily use TSA Module of PFMS
c. Map the RBI Account details in TSA Module of PFMS
d. Receive (electronically in TSA Module) the assignment done by the PAO
e. Approve the account and scheme mapping of sub-Agencies at Level 1
f. Issue e-Sub-assignments against the assignment setting limits of expenditure for
the sub-Agencies
g. Ensure funds are not transferred/parked in any other account except as per the
guidelines
h. Process payments by adhering to due process
i. If existing accounts with commercial banks is to be used for specified purposes
in the guidelines (such as payment of TDS, IT and GST, opening of LoC for
foreign suppliers etc.), funds shall be transferred just-in-time and, in no case,
parked beyond two weeks.
j. All such unutilized funds (as above) shall be deposited back to the Consolidated
Fund of India.
2. Model 2 - through Scheduled Commercial Banks (SCBs)
a. Open Account with a SCB authorized to do Government business, for each
scheme under which it receives grant
b. Mandatorily use REAT Module of PFMS or integrate own IT system with PFMS
for exchange of information (contact PFMS Rollout for details)
c. Approve the account and scheme mapping of sub-Agencies at Level 1
d. Approve the scheme mapping of all sub-Agencies using the CNA’s Account
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e. Allocate limits for Level 1 sub-Agencies and all other sub-Agencies using the
Central Nodal Account
f. Ensure funds are not transferred/parked in any other account of any Agency
Submit DCs after utilization of the funds that were transferred in the Central
g
Nodal Account
h. Ensure that interest earned from the funds released is remitted to the
Consolidated Fund of India
3. One time activity-
a. Ensure refund of unspent balance of lower level Agencies to the Central Nodal
Account. This is needed after opening of the Central Nodal Account and other
Zero Balance Subsidiary Accounts, and prior to assigning the drawing rights to
sub-Agencies.
******

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