Roll and Function of Various Stake Holders towards External Assistance And Fund Flow Mechanism

1. Roll and Function of Various Stake Holders towards External Assistance And Fund Flow Mechanism

2. Govt. of India - Ministry of Finance Departmentof EconomicAffairs Departmentof FinancialServices Departmentof Revenue Departmentof Expenditure DivisionsunderDEA MultilateralRelations Division MultilateralInstitutions Division BilateralCooperation Division AAA&DDivision EconomicsDivision Infra&Investment Division BudgetDivision

3. FUNCTIONS of AA&AD • External Aid Accounting • Disbursements Aid Accounts & Audit Division • Debt Servicing • Coordinating with Project Implementing Agency, Donor, Bank etc. • Budget for External Aid Receipts & Payment • Maintaining External Aid Statistics Debt Statistics and other Reports in computer system for management.

4. Role of BorrowerMinistry of Finance (DEA)(MultilateralInstitutions and Bilateral Cooperation Divisions) Facilitates Appraisal Processing and Negotiations Signing of Agreements Causing agreements to take effect Follow up of project implementation and monitoring Coordinating mid-term review and completion report to donor All other actions relating to Agreements viz. Amendments, Reallocation, etc.

5. Role of Project Implementing Authority Helps in project appraisal Signing project agreement Ensuring proper procurement procedures acceptable to donor Responsible for all project activities and sending periodical reports to donor Maintaining proper accounting records based on sound financial management Responsible for preparing reimbursement claims and sending the same to Aid Accounts & Audit Division, New Delhi Ensuring timely audit of accounts and reports to donor by due date Prepare completion report of the project identifying further phase of the project where donor can finance

6. Role of Aid Accounts & Audit Division(AA&AD) Authorized signatory to withdraw funds from the loan accounts from the Donor Responsible for maintaining special account for advance deposit received from the Donor and ensuring submission of audit certificate to the Donor Arranges periodical payment to Donor of all loan charges and principal repayment by due date Supplies disbursement details to PF-I, Department of Expenditure for release of Additional Central Assistance to State Governments. Maintaining Sovereign Debt Statistics and reconciling the same periodically with Donor. Rendering Periodical Accounts to C.G.A. for incorporation in the Union Finance Account. Publication of Annual External Assistance Brochure.

7. Role of RBI towards External Aid Repository of all Foreign Currencies Inflows INR equivalent of Foreign Currency Flow from External Aid is passed on to the Credit of CAA&A Maintenance of Loan-wise Special Account in disbursed currency for the advance/deposits received from Donors. Coordinating with CAA&A for sending External Debt data to Donor and other institutions. Providing Exchange Rate for Government transactions of major Foreign Currencies to AAAD on daily basis

8. Role of Commercial Bank towards External Aid S.B.I., B.O.B., Canara Bank, BOI, UBI and PNB are designated banks. Responsible for remitting foreign currencies to the donors towards repayment of principal and interest payment and other charges on due dates Coordinates with CAA&A and RBI in discharge of their functions.

9. Multilateral Agreement Agreement with an institution or bank whose capital is subscribed by two or more countries / institutions / banks to finance in different (multi) currencies equivalent to loan currency e.g. agreement with International Financial Institutions like World Bank, Asian Development Bank etc.

10. Bilateral Agreement Agreement between two sovereign government Financing can either be in the currency of the donor or different currency equivalent of loan designated in donor currency

11. Foreign Expenditure Expenditure in the currency other than the currency of the borrower Local Expenditure Expenditure in the currency of the borrower

12. PROJECT CYCLE Identification By Govt. Evaluation By Donor Proposal To Donor Project Completion Completion Report Appraisal By Donor Negotiations (Donor & Govt.) Declaring The Agreement Effective FinancialAgreement Donor /GOI & Project Agreement Donor/ Project State Project Execution

13. Disbursement Flow Chart Project Implementing Agency Claims AA&A Div. Reimbursement Claims Under Revolving Fund Procedure Reimbursement Claims Not Under Revolving Fund And All Direct Payment Claims Advice R.B.I. Mumbai Statement AA&A Div. Donor office in India Donor Head Quarters Direct Payment Reimbursement Claims Payees Account C.A.A.&A’s Account at RBI, New Delhi Through RBI Bombay Advise AA&A Div.

14. Fund Flow Chart Direct Payment Procedure For Expenditure Budgeted at S.R. of F.C. by P.I.A Interest. Claims AA&A Div. Donor through local office Payee’s Account Advise AA&A Div. Rs. at Selling Rate PMU Div. D.E.A S.R : Selling Rate of RBI. F.C. : Foreign Currency P.I.A. : Project Implementing Agency D.R. : Daily Rate D.O.E. : Department Of Expenditure P.F. Div. : Plan Finance Division C.A.S. : Central Accounts Section P.F. DivisionatD.O.E. R.B.I. C.A.S. Nagpur. Expenditure Incurred Cr/Dr. State Govt. Account Credit CAA&A’s Account

15. Fund Flow Chart- Reimbursement Procedure Expenditure Budget of P.I.A. Claims A.A.& A Div. For Claims Under Revolving Fund For Claims Outside Revolving Fund RBI Mumbai Donor Through Loacl office Statement Disbursement to CAA&A Account A.A.& A. Div. P.F. Div. of D.O.E P.I.A. : Project Implementing Agency P.F. : Plan Finance D.O.E. : Department of Expenditure C.A.S. : Central Accounts Section PAO Expenditure RBI, C.A.S. Nagpur State Govt. Account- Credit

16. Back to Back Loans 12th Finance Commission recommended that External Assistance may be passed on to states on the same terms and conditions, on which the loans/grants are received by GOI. Government of India has accepted this recommendation. All External aid agreements for State Projects except for Special Category States w.e.f. 1st April 2005 are now on Back to Back basis. However there is no change in upfront payment to donor by AAAD and for release of ACA by PF-I.

17. Thank you