BusinessCommercial Banks Ordered to Close Zero Balance Government Accounts

Commercial Banks Ordered to Close Zero Balance Government Accounts

The federal government has directed all commercial banks to close accounts of public sector entities with zero balance.

According to Diariespk, the directive was issued by the State Bank of Pakistan and a memorandum was sent on May 18 in which the government directed all ministries, divisions, four provinces, Azad Kashmir and Gilgit-Baltistan.

Governments and their public sector entities were ordered to immediately transfer their working capital and surplus funds set aside for investment to the sole federal treasury account.

All of these entities, including the Registrar of the Supreme Court and High Courts, the Senate, the National Assembly and the Military Accounts, were last month instructed by the Ministry of Finance to refrain from post-July 2003 notifications to such entities to add additional funds and working capital to their accounts allow to keep ‘withdrawn immediately’.

The May 18 statement added that “approval of any public sector entity to maintain a working balance is also withdrawn.”

Subsequently, in a new notification issued to the banks on June 11, the Ministry of Finance requested that the process, which would start in 2020 after the passage of the Public Finance Management Act 2019, be implemented in consultation with the SBP and international lenders. was also formulated.

With a view to consolidating the cash balance of the federal government, the Finance Division has collected information on all the accounts managed by the federal government agencies through the SBP.

An analysis of this information revealed that thousands of zero balance accounts are inactive and there are zero balance accounts in scheduled commercial banks.

The Finance Minister said that under Article 78 of the Constitution, all revenues, recovery of debts and all amounts received by the Government of Pakistan or from the Federal Consolidated Fund (FCF) or the Public Accounts (PAF) of the Federation will be part of the cash balances of both FCF and PAF are kept in SBP Central Account No. 1 (Non Food).

Under the Public Finance Management (PFM) Act, 2019, the functions of FCF and PAF are administered by the Finance Division will not transfer public money from any government account to another bank account for investment or deposit.

Subsequently, the government also notified Cash Management and Treasury Single Account Policy 29-2019 and Cash Management and Treasury Single Account Rules 2020.

Under which “no government office shall open, operate or maintain any bank account for any purpose other than the Public Finance Management Act” and that “before these rules, government offices any approval for opening bank accounts in scheduled banks through has been revoked after the enactment of these rules.

Under these rules, accounts already opened had to be closed and, if any, had to be transferred to the Federal Consolidated Fund.

Related Stories

Pakistan Inflation to hit high of 25% this fiscal year: ADB

Pakistan Inflation to hit high of 25% this fiscal year. Asian Development Bank has released the annual outlook report...

A record decline in lending from banks to the private sector

In the current financial year, there has been a record decline in the provision of credit from banks to...

Petrol Price is likely to be more expensive from tomorrow

There is a fear of increasing the petrol price across the country from tomorrow. According to the sources, the petrol...

Trending on DiariesPK