New banking norms help save interest cost for CSS central fund transfers

This system has minimized instances of funds lying idle at state level, making them available for other schemes

- Gireesh Chandra Prasad

The central government’s revamped fund transfer mode for state agencies executing centrally-sponsored schemes (CSS) is helping the Centre save interest costs, and ensuring timely funds for executing agencies. That apart, it also ensures transaction data is made available directly to policymakers at the ground level, a person aware of the impact of executing the new mode, said.

The revamped fund transfer method, introduced in 2021, required states to assign a single nodal agency (SNA) for each centrally-sponsored scheme. The central funds are first transferred to the states’ accounts with Reserve Bank of India, and then to the bank account of the nodal agency.