CHAPTER 3
PROCEDURE TO BE FOLLOWED BY DRAWING AND DISBURSING OFFICERS AUTHORISED TO DRAW CHEQUES (CHEQUE DRAWING DDOs)

3.1    DELEGATION OF CHEQUE DRAWING POWERS TO DRAWING AND DISBURSING OFFICERS.

3.1.1    As a general rule in the departmentalised system of accounting, all payments are to be made only by the Pay and Accounts Offices of the Ministry/Department after proper pre-check. However, as a partial exception to this rule, the drawing and disbursing officers of offices which are not located at the same station where the Pay and Accounts Office is located, may be delegated powers with the prior approval of the Controller General of Accounts to draw funds directly from the local branches of the Public Sector Bank, accredited to the ministry/ department by means of cheques for arranging payments of the categories specified in para 3.1.3.

The proposals for delegation of cheque drawing powers to Drawing and Disbursing Officers who are not located at the same station as, or near about, the Pay and Accounts Office, should be submitted to the Controller General of Accounts after due scrutiny and keeping in view the need to restrict the number of cheque drawing DDOs. Cases of delegation of cheque drawing powers to the DDOs may be forwarded when it is inescapable, with the recommendation of Chief Controller/ Controller of Accounts. In cases where the head of accounting organisation is a Deputy Controller of Accounts, the proposal should be routed through the I.F.A. The following information should invariably be furnished while submitting the proposal to the Controller General of Accounts:

  1. The complete designation and address of the Drawing and Disbursing Officer.
  2. The name of the Pay and Accounts Office under whose payment control the DDO is.
  3. Total number of staff under the payment control of the DDO.
  4. The Budget Grant for the relevant year.
  5. The distance from the nearest cheque drawing D.D.O.
  6. Distance from the Pay and Accounts Office.
  7. The average number of bills submitted to the PAO for pre-check during the preceding one year.

The head of the accounts organisation may directly approach the Reserve Bank of India, Department of Government Account, Central Office, Mumbai for opening the bank account in respect of the new cheque drawing DDO. No request for opening such an account will be sent by the head of accounts organisation unless the approval of the Controller General of Accounts has been received for delegating cheque drawing powers to the DDO. However, in case of opening of assignment accounts in respect of cheque drawing powers given to the divisional officer in terms of the C.P.W.A. Code in the Public Works Department, such approval is not necessary but a copy of the request made to the R.B.I. should be endorsed to the Controller General of Accounts.

3.1.2    Every Government Officer who is authorised to draw cheques on a bank shall send his specimen signature and also the signature of the second signatory to the Bank, duly countersigned by an independent officer, whose signature is available with the bank. When the first signatory is relieved, the specimen signature of the new incumbent and also that of the second signatory shall be countersigned by the relieved officer. In this connection cheque drawing DDO may follow the instructions as prescribed for the Pay and Accounts Officer (vide para 1.4.2 of CAM)

3.1.3    Cheque Drawing DDOs are permitted to make payments of the following categories of bills:

  1. Pay and allowances including wages and medical claims - both advances and final bills;
  2. Travel expenses;
  3. Office contingencies;
  4. Advances from the provident funds for all categories ;
  5. Withdrawals from G.P. Fund and final withdrawals of accumulations in the fund for group 'D' government servants;
  6. Payments arising under the Deposit Linked Insurance Scheme to group 'D' government servants;
  7. All short term loans and advances to government servants (i.e. those recoverable in less than 60 instalments).

Payments of advances will be made after sanction of the competent authority is obtained , a copy of which should be sent to the Pay and Accounts Officer.

Bills for all other kinds of payments like payments of long-term loans and advances and for withdrawals from provident fund (in respect of Government servants other than Group 'D') under Rules 15 and 16 of General Provident Fund (Central Services) Rules, 1960 or corresponding provisions of other Provident Fund Rules, will be presented to the Pay and Accounts Office concerned for pre-check and payment by bank drafts. Such payments should not be made by the D.D.Os by issue of cheques against their assignment.

In so far as the Executive Engineers functioning as cheque drawing D.D.Os under Central Public Works Department and departments for which the provisions of Central Public Works Account Code are authorised to be followed, are concerned, the purposes detailed in the Central Public Works Account Code may be deemed to be those approved by the Controller General of Accounts. However, in the case of a Public Works Division, if an officer other than the Executive Engineer is declared as a drawing and disbursing officer for the purpose of not only drawing the bills for pay and allowances etc. of the establishment of the Public Works Division but also for drawing bills for works and ancillary payments, such DDOs working on the public works system may be delegated powers to draw cheques for works and ancillary payments in addition to the categories of payments mentioned above, with the prior approval of the Controller General of Accounts, in respect of the said division or divisional office.

(Authority : Note under rule 11(2) of C.G.A. (R&P) Rules 1983).

Note :1    In the case of certain departments, the drawing and disbursing officer may also be delegated powers for drawal of cheque for limited purpose with the approval of the Controller General of Accounts for making payments of certain specified nature.

Note: 2    The term 'office contingencies' referred to above should be interpreted in a restricted way so as to cover only those items which would fall within the sanctioning power of the D.D.O as well as certain periodical payments such as rent, rates and taxes, electricity, water and telephone charges and other day-to-day office expenses.

Note: 3    Cheque drawing D.D.Os are not authorised to issue cheques for drawal of advances in term of Rule 34(3) (v) of G.P.F. (CS) Rules, 1960 Bills for the purpose, duly supported by formal sanction of the competent authority, will have to be forwarded to the PAO for payment after pre-check.

Note: 4    In the case of provident fund advances paid by the drawing and disbursing officer, a statement of the amounts paid and the particulars of the sanction, names of the subscribers, their account numbers, etc. should be forwarded to the P.A.O every month to enable the latter to ensure that the debit vouchers are received and posted in the accounts of the subscribers and that the debits adjustable by Accounts Officers of other Departments/Governments are passed on to them without fail.

3.1.4    In some cases the cheque drawing D.D.O. will also be permitted (by the head of department in consultation with the Principal Accounts Office) to make payments on account of pay and allowances and office contingencies etc. as explained above of one or more offices, in addition to his own, situated in the same station or near about. The heads of such offices will present such bills to the designated cheque drawing D.D.O for payment. Any such arrangement made should be intimated to the CGA and appropriate code numbers obtained for the concerned DDOs.

3.2    QUARTERLY ASSIGNMENT.

3.2.1    No expenditure can be incurred out of the Consolidated Fund in anticipation of passing of the appropriation ( vote on account ) act or the appropriation act relating to the budget of a financial year . The letter of credit to be opened in favour of a cheque drawing DDO at the beginning of the financial year will cover the amount for which vote on account has been obtained.

After the appropriation act is passed by Parliament and assented to by the President, the budget allotment is communicated by the IFA.

On the basis of the budget allotment communicated by the Financial Adviser, the Head of the Department, through the Pay and Accounts Office at the headquarters will make distribution of the allotment among the drawing and disbursing officers under his control. On the basis of the allotments for the Drawing and Disbursing officers with cheque drawing powers and the net cash requirement for disbursal of pay and allowances, T.A., contingencies etc. intimated by the D.D.Os, the Pay and Accounts Office will determine the amount of assignment for every quarter of the financial year. While determining the assignment for each quarter, the PAO will also take into account the anticipated drawals on account of advances and withdrawals from GPF for which DDOs are authorised to issue cheques. Thereafter, the Pay and Accounts Officer will authorise the paying branch of the bank by means of a letter of credit, to make payment on the cheques drawn from time to time by the concerned Drawing and Disbursing Officer during the said quarter, not exceeding the limit specified in the Letter of Credit. While issuing the Letter of Credit for the first quarter of the financial year after the appropriation act is passed , the PAO will take into account the letter of credit issued earlier on the basis of the "Vote on Account".

The paying branch is responsible to ensure that at no time the amount assigned in the letter of credit is exceeded by the payment of any cheque. The fresh letter of credit issued after expiry of the period prescribed in the earlier letter of credit will be treated as an addition to the unspent balance of the earlier letter of credit except in respect of the first quarter as stated above. The Pay and Accounts Officers, while communicating the assignment for the second and subsequent quarters should indicate not only the amount assigned for that quarter, but also the progressive total of assignments upto the end of the quarter so that the bank is enabled to ensure that the total cumulative drawals from the beginning of the year do not exceed the total progressive assignments. However, the unspent assignment for the last quarter of the financial year is not to be carried forward to the first quarter of the next year.

The cheques actually issued during the last quarter but presented for payment during the next quarter (within the period of validity) will be taken by the banks against the assignment of the year in which they were drawn and not against the assignments of the year in which they are paid.

The D.D.O should keep a close watch over the drawals and should take prompt action for the renewal of the letter of credit by assignment of additional funds by Pay and Accounts Office. The system of quarterly allotment will also apply to disbursing officers functioning on Public Works Divisional Pattern.

3.2.2    A drawing officer in whose favour an assignment account has been opened in the accredited bank is not permitted to draw the whole amount and place it in a separate account in the bank or in a private account.[Rule 50(2) of Central Government Account(Receipts and Payments)Rules 1983).

Note:    It is also not permissible to draw cheques and deposit the amount in the department's cash chest at the end of the year for the purpose of showing the full amount of the grant as utilised. (Note below Rule 50(2) of CGA(R&P)Rules ,1983. )

3.2.3    The procedure prescribed in paragraphs 1.4 to 1.6 of Chapter 1 regarding sending of specimen signature, supply of cheque books, the different classes of cheques etc., and procedure for obtaining bank drafts will also apply to drawals by cheque drawing DDOs.

3.3    PROCEDURE FOR PAYMENT

3.3.1    The bills relating to the classes of payments referred to in para 3.1.3 above will be prepared in accordance with the rules and procedures prescribed in Central Government Account (Receipt and Payments ) Rules 1983/G.F.Rs. etc. and presented to the officer authorised to issue cheques. In so far as the bills of his own office are concerned, the cheque drawing D.D.O. will ensure that to the extent possible the bills are got checked independently by a person other than the one responsible for the preparation of the bills.

3.3.2    The bills received for payment from D.D.Os who are attached for payment with the cheque drawing DDO will be verified to make sure that they relate only to the classes of payments which the D.D.Os are empowered to make by issue of cheques, and bills which do not fall under these categories, if received, will be returned to the D.D.Os concerned for sending them to the Pay and Accounts office for pre-check and payment. After this preliminary verification, the bills will be entered in the "Register of Bills Received" (Form CAM 18) and will be subjected to relevant checks enumerated in part III and section I of part IV of the Central Government Account (Receipt and Payment) Rules, 1983 and Chapter 4 of this manual. Besides, it will also be ensured that the quarterly assignments as intimated by Pay and Accounts Office in respect of each office are not exceeded, through the "Register of Cheques Issued" (Form CAM 19). The PAO shall also maintain a suitable register in respect of each DDO to ensure that the drawals are not in excess of the assignment. This register should be posted from the weekly accounts of the D.D.Os and also reconciled with the bank scrolls.

Inter-alia, the bills shall be arithmetically checked and examined with a view to seeing that the claim is admissible, the authority is good, the signature and countersignature where necessary are genuine and in order, and corrections, if any, have been duly attested. After satisfying himself in all respects, the cheque drawing officer will sign the pay order on the bill showing the amount for which the bill is passed in words and figures and deface the Pay Order. The cheque will then be prepared for the net amount of the bill. (The provisions contained in Rule 42 of CGA(R & P) Rules,1983 should be observed while writing cheques). The number and date of all cheques issued are noted by the cheque drawing officer in the 'Register of Cheques Issued' (Form CAM 19 ) he will attest the entry at the time of signing each cheque . The entries in this register will then be subjected to check by another officer (preferably a Gazetted Officer) with reference to the 'pass order' in the paid voucher. The register should be closed on the same day by striking the totals of Col. 7. Instructions given in para 2.6.1 of this manual will also be complied with .

3.3.3    The cheque Drawing D.D.O. at the end of the financial year should intimate his Pay and Accounts Officer, the total number of cheques issued on the last day, total amount thereof, and the number and amount of the last cheque under each category. This intimation should reach (telegraphically from outstation Cheque Drawing DDOs) the Pay and Accounts Officer not later than the 1st working day of the next financial year to enable him to send a consolidated statement to the Pr. Accounts Office.

3.4    LIST OF PAYMENTS AND BANK RECONCILIATION

3.4.1    In terms of the procedure for reporting and accounting of transactions, the dealing branch of the bank will send a copy of the daily scroll to the cheque drawing DDO.

3.4.2    The scrolls received from the bank should be checked with reference to the Register of Cheques Issued as to the number and the amount of cheques paid. Date of encashment should be noted in the relevant column of the register of cheques issued. A Bank Reconciliation Statement (Form CAM 20) should be drawn up every month explaining the difference between total payments made as per the bank scroll and the total payments during the month as per the register of cheques issued, indicating the details of the cheques issued during the month but not encashed, and cheques issued in earlier weeks cashed during the month. Discrepancies, if any, noticed in the scrolls should be taken up with the bank immediately. The bank reconciliation statement will also be sent to the Pay and Accounts Officer .

3.4.3    The drawing and disbursing officer shall prepare a List of Payments in triplicate (Form CAM 21) at the end of every week. Two copies of the list of payment accompanied by the paid vouchers should be sent to the Pay and Accounts Office on the due dates as mentioned below:

1st to 7th .. .. ..by the 9th of the month
8th to 14th .. .. ..by the 16th of the month
15th to 21st .. .. ..by the 23rd of the month
22nd to the end of the Month...DAILY
Last day's scroll ........... .by the 3rd of the following month.

The DDOs shall prepare a bank reconciliation statement every month and send it to the PAO. A similar reconciliation statement in respect of receipts shall be sent (Form CAM 22).

Note :-    Sub-vouchers upto Rs. 500/- in value shall be retained by the cheque-drawing officers in their offices vide Rule 111(3) Central Government Account (Receipt and Payment) Rules,1983 and these would be examined at the time of internal/local audit of their initial records.

A certificate would have to be recorded by him on each contingency bill to the effect that sub-vouchers of value upto Rs. 500 numbering from Sub-Voucher.....to Sub-voucher..... have been retained in his office.

3.4.4    In the case of officers rendering accounts on the Public Works/Forest system, the due dates for submission of compiled accounts to the Pay and Accounts Office shall be the 7th of the succeeding month.

3.5    CHEQUE BOOKS--CUSTODY OF - PRECAUTIONS.

3.5.1    Cheque books will be supplied to cheque drawing DDOs by the Pay and Accounts Offices concerned. The following instructions contained in Central Government Accounts (Receipts and Payments) Rules,1983 should be carefully observed by the cheque drawing officers:-

(i)    an account of cheque books and of cheque forms used daily will be maintained by the cheque drawing DDOs in the same form as detailed in paras 7 and 9 of Annexure 3 of chapter 1 of this manual.

(ii)    Cheque books shall on receipt be carefully examined by the drawing officer who should count the number of forms contained in each and record a certificate of count on the fly-leaf. (Rule 40 of Central Government Account(Receipts and Payments) Rules,1983.

(iii)    Cheque books must be kept under lock and key in the personal custody of the drawing officer who, when relieved shall take receipt for the exact number of cheques made over to the relieving officer. (Rule 40(2) of Central Government Account (Receipts and Payments) Rules,1983).

(iv)    The cheque drawing DDOs will notify the dealing bank on which he draws cheques , as well as the Pay and Accounts Officer , the number of each cheque book which from time to time he brings into use and the serial numbers of cheque forms it contains . The bank will keep a record of the particulars for verifying the genuineness of the cheques presented for encashment Rule 39 of CGA(R&P) Rules,1983).

(v)    The loss of cheque books or a blank cheque form shall be notified promptly to the branch of the bank with whom the disbursing officer concerned has a drawing account. (Rule 41 of C.G.A.(R&P) Rules,1983).

(vi)    In the absence of a specified request to the contrary from the payee, cheques drawn in favor of corporate bodies, firms or private persons shall be crossed. Subject to any instructions received from the payee a cheque shall be crossed "& Co." with the addition of the words "Not negotiable" between the crossing. Where the payee is believed to have a banking account, further precaution shall be adopted where possible by crossing "----------- & Co." by quoting the name of the bank through which the payee will receive payment and by adding the words "A/c payee only--not negotiable". This rule shall apply to all cases where the use of crossed cheques is prescribed {Rule 44 of C.G.A.(R&P) Rules,1983}.

(vii)    All cheques should be written and signed in indelible ink only {note 4 below Rule 42 of C.G.A.(R&P) Rules,1983}.

(viii)    All cheques, irrespective of the category, drawn for Rs.10 lakhs and above shall bear two signatures. The Head of the accounting organisation shall nominate another gazetted officer /senior most non-gazetted officer, as second signatory for this purpose. (O.M. No. 1(3)/95/TA/Pt.file/578 dated 27.7.98)

(ix)    All corrections and alterations in a cheque shall be attested by the drawing officer with his full signature [Rule 43 of Central Government Account (Receipts and Payments), Rules,1983].

(x)    Cheques shall be payable at any time within three months after the month of issue; thus a cheque bearing any date in January is payable at any time upto 30th April.

If the currency of a cheque should expire, it may be received back by the cheque drawing DDO. Revalidation of a time barred cheque is not permissible irrespective of the date of its drawal. For the procedure of cancellation of the time barred cheques and issue of fresh cheque in lieu thereof, the provisions of Para 2.7.1 may be strictly followed. In the event of non-return of the time-barred cheque to the drawer, the drawer should on the expiry of the prescribed period of three months after the month of issue of the cheque require the payee either to return the cheque for cancellation/issue of fresh cheque in lieu thereof. (Rules 45 and 46(2) of C.G.A.(R&P) Rules ,1983).

(xi)    When it is necessary to cancel a cheque before its issue, its cancellation must be recorded with dated signature on the counterfoil of non-MICR cheque/ loose leaf in case of MICR cheque, as the case may be, and the cheque must be destroyed. In cases where it is issued and withdrawn, i.e. , a fresh cheque is not required to be issued , the cheque should be defaced as above and forwarded to the P.A.O.. Simultaneously , the entries in the accounts should be suitably reversed (Rule 47 of C.G.A.(R&P) Rules,1983).

(xii)    If a request is received by the cheque drawing DDO for issue of a fresh cheque in lieu of a cheque which is alleged to have been lost , within a period of one year from the date of issue of original cheque, he should send an intimation by registered post (acknowledgement due) to the bank drawn upon regarding the alleged loss of the cheque and advise it to stop payment if the cheque is presented for payment thereafter. If the currency of the cheque has not expired at the time of sending such an intimation, the bank shall acknowledge in writing in the form given in para 2.4.1 of chapter 2 of this manual. In case, however, the currency of the cheque, alleged to have been lost, has expired when the intimation regarding the loss of the cheque is sent to the bank, no acknowledgement of the 'stop payment order' may be insisted upon from the bank; the postal acknowledgement may be treated as sufficient for the record of the cheque drawing DDO. On receipt of acknowledgement from the bank the cheque drawing DDO will send a copy thereof to the Pay and Account Office for issue of a non-payment certificate.

On receiving a copy of this acknowledgement from the said D.D.O., the PAO concerned will, after verification of his relevant records i.e. Register of Cheques delivered, etc. and after keeping a suitable note against the relevant entry in that register, issue a non-payment certificate to the D.D.O. in the following form:-

"Certified that cheque No.......dated.........for Rs.....reported by..........(the drawing officer) to have been drawn by him on.......branch of......bank in favour of......has not been paid".

The D.D.O. will note particulars of the non-payment certificate received by him against the relevant entry in the office copy of the list of payments, to indicate that the original cheque has not been paid and it has been 'stopped' from payment. A similar note will also be made by him on the counterfoil of that cheque and office copy of the relevant paid voucher before issuing a fresh cheque in lieu thereof. Provisions of para 2.4.1 (iii) of Chapter 2 will be followed for the purpose of issue of a fresh cheque and the number and date of the fresh cheque will also be noted on the list of payments, paid voucher and counterfoil of the old and cancelled cheque. While the paying banks need not thus issue 'non-payment certificate' there will be no change in their responsibilities in regard to lost cheques. All usual precautions will continue to be exercised by them with a view to ensuring that a cheque in respect of which advice has been received is not subsequently paid. If the original cheque is found to have been paid afterwards, the DDO will report the matter immediately to the paying branch under telegraphic intimation to the P.A.O.[Rule 48 of Central Government Account(Receipt and Payment),Rules,1983].

3.6    RECEIPT SCROLLS.

Procedure laid down in para 1.10 of this manual should be followed.

3.7    ACTION IN PAY AND ACCOUNTS OFFICE ON PAYMENT SCROLLS

One of the two copies of the lists of payments will be used as 'Register of Cheques Delivered' in the Pay and Accounts Office. (These copies should be kept in a guard file in the Pay and Accounts Office). The second copy with paid vouchers will be sent to Compilation Section. After the receipt of the Payment scroll and paid cheques from the bank, the procedure laid down in para 1.9 of Chapter 1 should be followed mutatis mutandis.