Roll and Function of

Various Stake Holders

towards External Assistance
And
Fund Flow Mechanism
 Govt. of India - Ministry of Finance
Department of Department of Department of Department of
Economic Affairs Revenue Expenditure Financial Services

Divisions under DEA

Multilateral Institutions Multilateral Relations Bilateral Cooperation

Division Division Division

AAA&D Division Economics Division Infra & Investment

Division

Budget Division
 FUNCTIONS of AA&AD
1. External Aid Accounting

2. Disbursements

Aid Accounts 3. Debt Servicing

&
4. Coordinating with Project
Audit Division Implementing Agency, Donor,
Bank etc.

5. Budget for External Aid Receipts

& Payment

6. Maintaining External Aid Statistics

Debt Statistics and other Reports
in computer system for management.
 Role of Borrower
Ministry of Finance (DEA)
(Multilateral Institutions 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.
 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
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.
 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
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.
 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.
 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
Foreign Expenditure
 Expenditure in the currency other than the currency
of the borrower

Local Expenditure

 Expenditure in the currency of the borrower

 PROJECT CYCLE
Identification By Govt.

Evaluation By Donor Proposal To Donor

Project Completion Appraisal By Donor

Completion Report
Negotiations (Donor & Govt.)
Declaring The
Agreement Effective Financial Agreement Donor /GOI
& Project Agreement Donor/
Project Execution Project State
 Disbursement Flow Chart
Project Implementing Agency
Claims
AA&A Div.
Reimbursement Claims Under
Revolving Fund Procedure
Reimbursement Claims Not
Advice Under Revolving Fund And
R.B.I. Mumbai All Direct Payment Claims
Statement
AA&A Div.
Donor office in India

Donor Head Quarters

Reimbursement Claims Direct Payment

Payees Account
C.A.A.&A’s Account at RBI,
New Delhi Through RBI Bombay Advise AA&A Div.
 Fund Flow Chart Direct Payment Procedure
For Expenditure Budgeted Interest.
at S.R. of F.C. by P.I.A
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.
P.F. Division at D.O.E. F.C. : Foreign Currency
P.I.A. : Project Implementing Agency
R.B.I. C.A.S. D.R. : Daily Rate
Nagpur. D.O.E. : Department Of Expenditure
Expenditure P.F. Div. : Plan Finance Division
Incurred Cr/Dr. State Govt. Credit CAA&A’s C.A.S. : Central Accounts Section
Account Account
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

Statement Loacl office

A.A.& A. Div. Disbursement to CAA&A Account

P.F. Div. of D.O.E P.I.A. : Project Implementing Agency

P.F. : Plan Finance
PAO Expenditure RBI, C.A.S. Nagpur D.O.E. : Department of Expenditure
C.A.S. : Central Accounts Section
State Govt. Account- Credit
 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.