The government deposits its monetary reserves with the Reserve Bank. The Reserve Bank may also function as a banker and handle debt management for state governments by agreement.

Currently, save for Sikkim, the Reserve Bank operates as a banker to all state governments in India (including the Union Territory of Puducherry). Sikkim has a limited arrangement in place to handle its public debt.

Who is the cash Manager of Govt of India?

The Reserve Bank of India has performed the typical central banking duty of managing the government’s banking transactions since its foundation.

According to the Reserve Bank of India Act, 1934, the Central Government entrusts the Reserve Bank with all money, remittance, exchange, and banking operations in India, as well as the administration of the country’s public debt.

Additionally, the government deposits its monetary reserves with the Reserve Bank. The Reserve Bank may also function as a banker and handle debt management for state governments by agreement.

Currently, save for Sikkim, the Reserve Bank operates as a banker to all state governments in India (including the Union Territory of Puducherry). Sikkim has a limited arrangement in place to handle its public debt.

The Reserve Bank has well-defined responsibilities and provides governments with a variety of banking services.

The Reserve Bank acts as a banker to the government, receiving and disbursing funds on behalf of the various government agencies.

Additionally, the Reserve Bank is responsible for floating and managing loans on behalf of governments. It provides governments with Ways and Means Advances (a short-term interest-bearing loan) to address temporary discrepancies in their receipts and payments.

Additionally, similar to a portfolio manager, it arranges for the investment of governments’ surplus cash balances. The Reserve Bank advises the government on monetary and banking affairs when called upon to do so.

The Central Government and state governments have the authority to enact rules governing the receipt, custody, and disbursement of funds from the consolidated fund, contingency fund, and public account.

These restrictions are legally binding on the Reserve Bank, as the Reserve Bank holds accounts for these funds.

Governments’ banking functions are carried out by the Public Accounts Departments at Reserve Bank offices and branches. Due to the Reserve Bank’s 29 offices and sub-offices, it appoints other banks to act as its agents in doing banking business on behalf of governments.

The Reserve Bank compensates banks for carrying out government business on its behalf.

Currently, the Internal Debt Management Department at the Central Office and the Public Debt Office at Reserve Bank offices and branches manage public debt, including the flotation of new loans.

The final compilation of government accounts for the Centre and States is carried out in the Reserve Bank of India’s Nagpur office, which features a Central Accounts Section.

source