The Reserve Bank of India vide its Notification dated 29th May 2020, has advised the agency banks to follow the penal interest calculation for delayed reporting of State Government transactions through the methodology issued by RBI in its earlier circular dated 21st March 2007.
Further the circular on Recovery of Interest on delayed remittance of Government Receipts into Government Account dated 26th September 2019 shall stand withdrawn from the date of its issue, further in that circular the agency banks were advised that petty claims of penal interest involving an amount of ₹ 500/- (on per transaction basis) or below would be ignored and excluded from the purview of penal interest on delayed reporting of State Government transactions, thus bringing it at par with similar instructions on reporting of Central Government transactions. These instructions were issued with the approval of the Comptroller and Auditor General of India (C & AG).
However RBI has already provided a methodology to calculate penal interest based on the transaction value of up to ₹ 1 lakh and above ₹ 1 lakh, therefore there is no need for further filters of ₹ 500/- or below.
Click here to read the Notification.
