Banker to the governments: the Reserve Bank serves every State except Sikkim, and compiles the accounts at Nagpur

Background

The Reserve Bank of India Act, 1934 requires the Central Government to entrust the Reserve Bank with all its money, remittance, exchange and banking transactions in India and with the management of its public debt.
The Reserve Bank may by agreement also act as banker and debt manager to State Governments, and it acts as banker to all the State Governments in India except Sikkim, for which it has a limited agreement covering the management of public debt.
Ways and Means Advances are short-term interest bearing advances given to governments to meet temporary mismatches in their receipts and payments, and the rate of interest on them is linked to the repo rate.
For State Governments the scheme has a Special Drawing Facility against the collateral of government securities held by the State, and a normal Ways and Means Advance once that limit is exhausted.
A withdrawal beyond the Ways and Means Advances limit is treated as an overdraft.
Surplus balances of State Governments are invested automatically in Government of India 14-day Intermediate Treasury Bills.
Banking business for the governments is carried out by the Public Accounts Departments at Reserve Bank offices, while public debt is managed by the Internal Debt Management Department and the Public Debt Offices.
Final compilation of the Government accounts of the Centre and the States is done at the Nagpur office of the Reserve Bank, which has a Central Accounts Section.