Telangana allows Gram Panchayats to deposit funds directly in banks and post offices

In a move aimed at avoiding delays in processing payments through the treasury system, the Telangana government has allowed Gram Panchayats to deposit their funds, including their own revenue resources, in the nearest banks or post offices.

The State Legislative Assembly on Thursday passed a Bill amending the Telangana Panchayat Raj Act, 2018. Through the amendment, the government has inserted sub-section (3) under Section 70 of the Act.

The newly inserted provision states: “All moneys and funds received by the Gram Panchayat, including amounts received under schemes of the Central Government, shall be deposited forthwith in the nearest Nationalised Bank, Co-operative Bank or Post Office in such manner as may be prescribed.”

In the Statement of Objects and Reasons, the government said it had received representations seeking permission for Gram Panchayats to deposit their General Fund in nearby nationalised banks, cooperative banks or post offices, in addition to funds received under Centrally or State-sponsored schemes.

It pointed out that delays in processing payments through the treasury system were affecting the timely payment of salaries to Gram Panchayat staff and the discharge of other financial obligations.

Replying to the debate on the Bill in the Assembly, Panchayat Raj and Rural Development Minister D. Seethakka said that while municipalities already had a provision to deposit their funds in bank accounts, a similar provision was not available to Gram Panchayats.

She said delays in processing payments through the treasury system were hampering development works in villages and causing delays in the payment of salaries to Gram Panchayat employees.

There are about 12,000 Gram Panchayats in Telangana. Every year, the Central Finance Commission and State Finance Commission release around Rs 1,200 crore each, accounting for Rs 2,400 crore for the development of villages in Telangana. In addition, Gram Panchayats generate around Rs 400 crore annually through tax collections and other own-source revenues.

The amendment is expected to facilitate quicker access to funds and ensure timely payments for salaries and development-related expenses at the Gram Panchayat level.