APPENDIX IV

 

APPENDIX IV 

(See Article 9) 

AGREEMENT  BETWEEN THE RAJPRAMUKH OF TRAVANCORE-COCHINAND THE RESERVE BANK OF INDIA

An agreement made this thirtieth day of June one thousand nine hundred and fifty-two BETWEEN THE RAJPRAMUKH of TRAVANCORE-COCHIN of the one part and THE RESERVE BANK OF INDIA (hereinafter called ‘the Bank’) of the other part; WHEREAS the Bank was constituted and incorporated and is regulated by the Reserve Bank of India, Act, 1934 (being Act No. II of 1934) hereinafter called ‘the Act’ with and subject to the various powers, provisions and restrictions in and by the Act set forth and it was thereby inter alia particularly provided by section 

 

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21-A of the Act, the said section having been inserted by act XXXII of 1951, that the Bank may by agreement with the Government of any part ‘B’ State undertake, 

  (a) all its money, remittance, exchange and banking transactions in India including, in particular, the deposit, free of interest of all its cash balances with the Bank, and 

  (b) the management of the public debt of and the issue of any new loans by the State. 

2. Whereas the agreement contemplated by the Act is the agreement hereinafter set out; NOW IT IS HEREBY MUTUALLY AGREED AND DECLARED by and between the said parties here to as follows, that is to say:— 

  (1) This agreement shall come into force on the first day of July, 1952 or such later date as the Central Government may specify, and shall continue in operation in the first instance for three years, from the first day of July, 1952, or as the case may be from the date specified by the Central Government, and thereafter till determined in the manner hereinafter provided. 

  (2) The general banking business of the Government of Travancore-Cochin (hereinafter referred to as ‘the Government’) including the payment, receipt, collection and remittance of money on behalf of the Government shall be carried on and transacted by the Bank in accordance with and subject to the provisions of this agreement and of the Act and with and to such orders and directions as may, from time to time, be given to the Bank by the Government through any Government Officer or Officers authorised by the Government in that behalf and at any of the offices, branches or agencies of the bank for the time being in existence as may, from time to time, be so directed and for this purpose such accounts shall be kept in the books of the Bank and at such offices, branches or agencies of the Bank as shall be necessary or convenient as the Government shall, from time to time, direct in the manner aforesaid. 

3. (1) The Government shall employ the Bank as the sole banker in India of the Government who shall deposit, or cause to be deposited with the Bank or allow the Bank to received and hold as banker the whole of its cash balances at any places at which for the time being the Bank shall have an office, branch or agency and the Bank shall, subject to such orders as may from time to time, be given by the Government in the manner aforesaid receive and hold for the Government all such moneys as may be or become payable to the Government or on its account 

 

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and the Bank shall transact at its offices, branches and agencies for the time being existing respectively all such business for the Government regarding the receipt, collection, payment and remittance of money and other matters, as is usually transacted by bankers for their customers. The bank shall make the said moneys at the said offices, branches and agencies available for transfer to such places and at such times as the Government may direct. No interest shall be payable to the Government on any of the moneys for the time being held by the Bank. 

  (2) Nothing in sub-clause (1) shall prevent the Government— 

  (a) from carrying on money transactions at places where the Bank has no office, branch or agency; and 

  (b) with the prior approval of the Bank in writing and subject to such terms and conditions and for such period as may be agreed upon— 

  (i) from keeping a part of its cash balances with any other bank; and 

  (ii) from entrusting to any other bank the receipt, collection, payment and remittance of money on behalf of the Government at places where the Bank does not have an office, branch or agency. 

  (3) Any balances held by the Government in its custody at places where the Bank has no office, branch or agency shall not be in excess of the actual requirements of the Government at such places, and all such balances at such places as are in excess of such requirements shall be transferred to any place where the Bank has an office, branch or agency. 

4. The management of the rupee, public debt of the Government and the issue of new rupee loans by the Government and the performance of all the duties relating thereto respectively including the collection and payment of interest and principle and the consolidation, division, conversion, cancellation and renewal of securities of the Government and the keeping of all registers, books and accounts and the conduct of all correspondence incidental thereto shall be transacted by the bank at its offices in Bombay, Calcutta, Delhi and Madras and at any of its offices, branches and agencies at which respectively the administration of any portion or portions of the public debt of the Government is for the time being conducted or 

 

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interest thereon is for the time being payable and the Bank shall also keep and maintain such registers, books and the accounts in respect of the said public debt as the Government may, from time to time, direct and shall audit all payment of such interest and act generally as agents in India for the Government in the management of the said public debt and shall conduct with agency subject to such orders and directions with regard to the general management thereof as may, from time to time, be given to the Bank by the Government: 

Provided however that, as regards any public debt which is outstanding on the date when this agreement comes into force, the Government may, with the previous consent in writing of the Bank: 

  (a) conduct departmentally, in whole or in part, the management of such debt, or 

  (b) subject to such terms and conditions as may be approved by the Bank, entrust or continue to entrust, in whole or in part, the management of such debt to any other Bank or other agency. 

5. The Bank shall not be entitled to any remuneration for the conduct of the ordinary banking business of the Government other than such advantage as may accrue to it from the holding of the Government cash balance free of obligation to pay interest thereon, and such balances shall be maintained at an amount not below such minimum as may be greed upon between the Government and Bank from time to time. 

Provided that if Government wishes to remit funds outside the area within its jurisdiction, except as otherwise provided for in this agreement the Bank shall be entitled to make a charge for such remittances at rates not exceeding those which the Bank charges to banks referred to as ‘Scheduled Banks’ in section 42 of the Act, subject to a minimum charge of four annas for each remittance. 

6 The Bank shall make ways and means advances to the Government if so required at such rate of interest not exceeding bank rate as may be fixed by the Bank from time to time, provided that the total of such advances outstanding at any one time shall not exceed thrice the amount of the minimum balance prescribed under clause 5 and any subsidiary agreement provided under the clause and provided further that the advances outstanding shall be fully paid off at intervals 

 

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not exceeding three months from the date of the initial advance. 

7 The Government shall employ the Bank as its sole agent for investments by Government either of the Government funds or of funds managed by the Government and the Bank shall be entitled to charge commission for sales (but not for purchases or conversions) at the rate of 1/16 percent in addition to any further charges which the Bank may have to pay by way of brokerage, etc. The bank shall collect interest and maturity values of such investments on behalf of the Government without charge. 

8 As remuneration to the Bank for the management of the public debt as aforesaid the Bank shall be entitled to charge  to the Government half yearly a commission at the rate of ` 2,000 per crore per annum on the amount of the public debt as aforesaid at the close of the half-year for which the charge is made. In calculating this charge the following amounts shall be excluded from the amount of public debt, viz.— 

  (a) The amounts of loan discharged outstanding after one year from the date of a notice of discharge. 

  (b) The aggregate of the amount of stock certificates and of the amount in the Subsidiary General Ledger Account held by the Government and by each officer of the Government authorised in that behalf, provided that such holding by Government is ` 50,000 and upwards and by each such officer is `.50, 000 and upwards and provided also that the aggregate of all such holding by Government, and all such officers exceeds rupees one crore. 

And in addition to the charge of ` 2,000 per crore per annum the Bank shall be entitled to charge to the Government a fixed sum of ` 2,000 a year on account of the stock certificates referred to in head (b) of this clause and the Bank shall also entitled to charge the public (but not the Government) all such fees and charges as are now or may hereafter from time to time be prescribed by the appropriate authority for duplicate securities and for the renewal, consolidation, division or otherwise of all Government securities which the Bank issues: 

Provided that loans not directly issued by the Government but issued under the guarantee of the Government shall not be included in the calculation for the purpose of this clause but shall be a matter for separate arrangement if the 

 

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management of such loans is entrusted to the Bank. 

9. In addition to the above charges, and as remuneration for the issue of new loans, the Bank shall be entitled to charge to the Government:— 

  (a) a fee at the rate of ` 1,000 per crore of all new issues with a minimum of ` 1,000 in respect of each loan; 

  (b) renewal fees on the conversion applications, if the new loan involves conversion operation, at the rates that the Bank is entitled to charge the public for renewals; 

  (c) the total amount of brokerage actually payable (including brokerage for the Bank on their own application); 

  (d) the commission payable by the Bank to any agent of the Bank less the amount of turnover commission on Government transactions normally payable to such agent; and 

  (e) the Bank’s out of pocket expenses for advertising, telegrams, telephone calls, etc. 

10. The Bank shall maintain currency chests of its Issue Department at such places within the State Travancore-Cochin as the Government may, with the previous sanction of the Central Government prescribed and the Government shall provide sufficient accommodation for such chests as may be require for the deposit of notes or coin and shall be responsible to the Bank for the safe custody of the said chests, notes and coin. The Bank shall keep the said chests supplied with sufficient notes and coin to provide currency for the transactions of the Government and reasonable remittance facilities to the public at the said places. The Government shall supply the Bank with such information and returns as the Bank may, from time to time require as to the composition of the balances in the said chests and the amount and nature of the transfers to and from the said chests. The Bank shall have access to the said chests at all reasonable times for the purpose of inspecting and checking the contents. The Government shall be responsible to the Bank for the examination and corrections of coins or notes at the time of deposit in or withdrawal from the said chests. The bank may, with the previous sanction of the Central Government, close any currency chest maintained by it in pursuance of this clause. 

 

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11 The Bank shall not be at liberty to close any of its offices or branches except on days which are or are declared to be under, the Negotiable Instruments Act (Act XXVI of 1881) public holidays subject nevertheless and notwithstanding the provisions of that Act to any special orders or directions which may be issued by the Government and the Bank shall be responsible that no one of its agencies doing Government business for the time being existing shall be closed except on Sundays and on public holidays authorised by the Government within whose jurisdiction such agencies may be respectively situated. 

12 The responsibility for all loss or damage to the Government which may result from any act or negligence or omission of the Bank or its agents in conducting the business of the public debts aforesaid or the payment of interest or discharge value thereon or the renewal, conversion, consolidation, subdivision or cancellation of any Government security shall rest with and the borne by the Bank, provided however that it shall not be incumbent on the Bank to verify signatures, and endorsements on Government securities which prima facie appear to be in order and in the acceptance of which the Bank shall not be guilty of any negligence and in such cases no liability shall be incurred by the Bank in respect thereto; PROVIDED ALSO that in regard to the ordinary banking business at the offices, branches and agencies of the Bank of receiving and realising money and securities for money on account of the Government and paying cheques, orders, drafts, bills and other documents, whether negotiable or not, in the Bank’s capacity of bankers for the Government and whether such business be done by the Bank or by agencies or its behalf the responsibility to the Government shall be that of the Bank and such responsibility shall be that of a banker to any ordinary customer. 

13 The Bank shall remit on account of the Government between India and London such amounts as may be required by it, from time to time at the market rate of the day for telegraphic transfers, subject to the proviso that if any large transfer has to be effected in connection with any unusual operation and if it is considered by either party to be in appropriate to apply the rate of a single day an average rate based on a longer period may be fixed by agreement between the two parties. 

14 This agreement may be determined by either party giving to the other party one year’s notice in writing expiring with the end of a year of the currency of the agreement , such notice if given by or on behalf of the Government to be 

 

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addressed to the Governor of the Bank and to be served by leaving the same with the Central Office of the Bank or addressing the same to with the Central Office of the Bank by registered post and if given by the Bank to be served by leaving the same with, or addressing the same by registered post to, the Secretary to the Government in the Finance Department and immediately upon the expiration of such notice this agreement shall absolutely cease and determine save as to rights or liabilities acquired or incurred prior to such termination: 

Provided that no such notice shall be given before the expiry of two years from the date on which this agreement comes into force. 

1  In the event of any dispute arising as to the terms and conditions of this agreement, or as to the rights or obligations of the parties hereto such dispute or difference of opinion shall, in the event of the parties hereto failing to reach an agreement be referred to the Central Government whose decision shall be final and binding as between the parties hereto. 

2 Nothing in this agreement shall operate to affect in any way the obligations imposed either on the Government or on the Bank by or under the Act or any subsequent amendment or amendments of the Act. 

3 The Bank shall be entitled to perform all or any of the matter contained in or any amendment thereof or as may be agreed to by the parties hereto. 

Note:—The above agreement should be deemed to have effect as if it were an agreement made on the 1st day of November, 1956, under section 21-A between the Bank and the Government of Kerala [vide section 21-B of the Reserve Bank of India Act, 1934 (Act 2 of 1934)], as inserted by section 104 of the States Reorganisation Act, 1956 (Central Act 37 of 1956).