The Finance Division has directed all the federal government ministries, divisions, attached departments and subordinate offices (MDAS) to close their bank accounts with the commercial banks/financial institutions and transfer the balance funds to the federal government’s central account with the State Bank of Pakistan (SBP).
In this regard, the SBP issued a circular on Wednesday to all the chief executives/presidents of commercial banks regarding Government Treasury Single Account (TSA) Closure of Government Accounts Maintained with Commercial Banks/DFIs.
The SBP has also issued separate performa for the banks’ centralized treasuries for reporting to the chief manager SBP Banking Services Corporation, Karachi.
The performa for banks said:
Repatriation of Funds the Central Account I (non-Food) of the Federal Government in SBP in line with the directives of account holder’s institutions, through their authorized signatories, bank’s branches have closed the following government accounts and surrendered the available balances for onward credit to the Central Account I (non-Food) of the Federal Government with SBP.
In order to ensure closure of all the accounts and transfer of their balances to SBP through a standardized procedure, banks were hereby advised to develop their internal applications and processes to keep track of the
- Receipt of directives by the authorized signatories;
- Closure of accounts by banks’ branches and transfer of available balances to their centralized treasury
- Transfer of the consolidated amount by the centralized treasury to the SBP through RTGS.
Upon receipt of the account closure request, the respective branches will initiate the closure of accounts and transfer the available balances to their centralized treasuries within seven (07) days through their internal application.
According to a Topline Securities report, this process may take some time as no definitive timeline has been mentioned for receipt of Account Closure Request.
The report also noted that the total deposits categorized under the Federal Government (including government trusts, NGOs, and corporate bodies) come to Rs. 1.4 trillion (9% of the total deposits), as of August 2020.
A good move and a much awaited move, atleast for people with the financial understandings. BOP chief was accused of Rs9B corruption, this will limit and end the BOP and Bank of Sindh’s or other provincial banks being used as a shell by the local governments.