July 22, 2008	Tuesday	Rajab 18, 1429

KARACHI, July 21: The Sindh government has asked all the district coordination officers (DCOs) and the town municipal officers (TMOs) in the province to immediately close all their bank accounts except Account-IV and the local fund bank account maintained with the State Bank of Pakistan and the National Bank of Pakistan, it is learnt.

It is worth noting that apart from the local bank account, local governments are also operating various accounts with other banks to ‘facilitate’ their day-to-day transactions. According to official sources, this practice is in direct contravention of the relevant SLGO rules which make it clear that all revenues received by the district governments and the town municipal administrations shall form part of the district fund and the local fund respectively.

According to Section 108 (custody of funds) of the Sindh Local Government Ordinance (SLGO 2001), money credited to a fund or a public account shall be kept in the State Bank government treasury, a post office or a bank in such manner as shall be specified by the [provincial] government from time to time.

The DCO of each city or the district government has been authorised to maintain the Account IV, while the local fund is being maintained by the taluqa or town municipal officers.

Sources said that the city or district governments and town municipal administrations had opened various bank accounts in private banks and it was a common practice that they transferred provincial receipts from Account IV and deposited them in those accounts, prior to the end of every financial year on the pretext of payments to contractors or in a bid to save the money from being lapsed.

They said that once the provincial grant got transferred to some other account from the local fund, it would be difficult for the provincial authorities to track the transactions.

An official order issued in this regard says that there has been violation of financial discipline and it is the responsibility of the principal accounting officer to ensure the flow of government fund in appropriate direction and its maintenance of account under the prescribed rules.

“The practice of opening bank accounts in various banks is rampant in districts and TMAs. This has left the provincial exchequer in a vulnerable position,” says the notification. All bank accounts are to be closed immediately except the local fund bank account provided to the financial department in which funds are being released.

The order also called for a compliance report to be submitted to the finance department within five days, failing which the department would issue orders for the closure of all bank accounts.

When contacted, officials of the Saddar and Lyari towns admitted that under the relevant rules of the SLGO, all financial transactions were to be routed through the local fund banks.

However, they said under the new arrangement the clearance process would take a long time and it would create a lot of problems for the town administrations.

A Lyari town official said that it would further delay the disbursement of salaries to the employees, which were currently drawn by a nearby bank.

It may be recalled that instead of maintaining accounts in the National Bank of Pakistan, the Malir Development Authority (MDA) and the Lyari Development Authority (LDA) had opened accounts with private banks where a large number of people had deposited billions of rupees along with their applications to get a residential plot and waited for many months for the result of balloting.