What changed
RBI introduced specific T+3 (local) and T+5 (outstation) working day timelines for remitting government revenues to CAS, Nagpur, replacing earlier procedures. The penalty for delays is now formally called 'Delayed Period Interest' (still at Bank Rate +2%), and it applies to all amounts without any threshold. Relaxations for difficult areas require case-by-case approval from the Controller General of Accounts.
What it means for you
Banks must tighten their internal processes to ensure government collections are credited to RBI within the new timelines, or face automatic interest charges. The removal of any minimum amount threshold means even small delays will be penalized. This increases operational pressure on branches, especially those handling high volumes of government receipts.
What you must do
- Update internal SOPs to ensure local government collections are remitted to CAS, Nagpur within T+3 working days and outstation within T+5 working days, using the RBI calendar.
- Set up monitoring mechanisms to track remittance timelines and flag delays immediately to avoid 'Delayed Period Interest' at Bank Rate +2%.
- Prepare to receive and process quarterly penalty intimation from ministries/departments by the 15th of the following month.
- For branches in difficult areas, document cases for relaxation and submit to the Controller General of Accounts through the concerned ministry/department.
- Exclude OLTAS transactions from these instructions and ensure separate OLTAS compliance as per circular dated April 1, 2005.
Who it affects
State Bank of India and its Associates, All Public Sector Banks, Jammu & Kashmir Bank Ltd., Branches handling government receipts/revenues, Treasury and operations teams
What is the new timeline for remitting local government collections?
For local transactions (collecting branch and focal point branch in the same city/agglomeration), remittance to CAS, RBI, Nagpur must be completed within T+3 working days, where T is the day money is available at the branch.
What happens if we delay remittance beyond the permissible period?
Banks will be charged 'Delayed Period Interest' at Bank Rate +2% on the total delayed amount, regardless of the amount involved. The concerned ministry/department will send quarterly penalty details to your head office by the 15th of the following month.
Are private sector banks covered by this circular?
No, these instructions are explicitly not applicable to Private Sector Banks. They apply only to State Bank of India and its Associates, all Public Sector Banks, and Jammu & Kashmir Bank Ltd.