Rule 306 of The General Financial Rules 2017 Security Deposits by Government Servants Handling Cash

Original Rule Text

Rule 306 (1) Furnishing of security by Government servants handling cash.Subject to any general or special instructions prescribed by Government in this behalf, every Government servant,who actually handles cash or stores shall be required to furnish security, for such amount and in such form asCentral Government or an Administrator may prescribe according to circumstances and local conditions in eachcase, and to execute a security bond setting forth the conditions under which Government will hold the securityand may ultimately refund or appropriate it.Rule 306 (2) The amount of security to be obtained from a Government servant shall be determined on the basisof actual cash handled which shall not include account payee cheques and drafts.Rule 306 (3) Security should be furnished in the form of a Fidelity Bond in GFR 17, the security bond should beexecuted in Form GFR 14. The Administration shall see that the government servant pays the premia necessaryto keep the Bond alive, for which the government servant shall submit premium receipt in time. If the governmentservant fails to submit the premium receipt he shall not be allowed to perform the duties of his post and he shallbe dealt with in accordance with the terms of his appointment.Rule 306 (4) A Government servant who is officiating against the post of another cash or store handling Governmentservant shall be required to furnish the full amount of the security prescribed for the post. The Ministry orDepartment of Central Government, Administrators and the Comptroller and Auditor General in respect of personsserving in Indian Audit and Accounts Department may, however, exempt a Government servant officiating in sucha short-term vacancy from furnishing security if the circumstances warrant such exemption provided that -(i) they are satisfied that there is no risk involved;(ii) such exemption is granted only in the case of a permanent Government servant; and(iii) the period of officiating arrangement does not exceed four months.

Visual Summary

Who Furnishes Security

Government servants handling cash or stores.

Type of Security

Fidelity Bond (GFR 17) & Security Bond (GFR 14).

Exemption Conditions

Short-term officiating, permanent staff, no risk, max 4 months.

Executive Summary

Rule 306 of The General Financial Rules, 2017, mandates that government servants handling cash or stores must furnish security. This typically involves executing a Security Bond (GFR 14) and obtaining a Fidelity Bond (GFR 17). The amount of security is determined by the actual cash handled, excluding account payee cheques and drafts. Crucially, timely payment of Fidelity Bond premiums is required; failure to do so can result in the government servant being unable to perform their duties. Limited exemptions are provided for permanent government servants officiating in short-term vacancies (not exceeding four months), provided there is no associated risk and the exemption is warranted by circumstances.

In-Depth Analysis of the Rule

Introduction: Rule 306 outlines the mandatory requirements for government servants who handle public funds or property to furnish security. This rule is a cornerstone of financial accountability, aiming to safeguard government resources against potential losses due to dishonesty, default, or negligence.

Breakdown of the Rule:

Rule 306 (1) – Obligation to Furnish Security: This sub-rule establishes the primary requirement for every government servant who physically handles cash or stores to provide security. The form and amount of this security are to be prescribed by the Central Government or an Administrator, considering specific circumstances and local conditions. A security bond must be executed, detailing the conditions under which the government will hold, refund, or appropriate the security.
Rule 306 (2) – Determination of Security Amount: The amount of security is to be calculated based on the actual cash handled by the government servant. It explicitly excludes account payee cheques and drafts, focusing solely on physical cash.
Rule 306 (3) – Forms and Premium Payment: Security must be furnished using a Fidelity Bond (GFR 17) and a Security Bond (GFR 14). The administration is responsible for ensuring that the government servant pays the necessary premiums to keep the Fidelity Bond active. Failure to submit premium receipts in time will result in the government servant being barred from performing the duties of their post and being dealt with according to their terms of appointment.
Rule 306 (4) – Exemption for Officiating Staff: This sub-rule provides a conditional exemption. A government servant officiating in a short-term vacancy (i.e., temporarily filling another’s position) who handles cash or stores may be exempted from furnishing the full prescribed security. The conditions for this exemption are: (i) no risk is involved, (ii) the exemption is granted only to a permanent government servant, and (iii) the officiating period does not exceed four months.

Practical Example: Consider a government cashier responsible for daily cash transactions. Under Rule 306, this cashier would be required to furnish security, including a Fidelity Bond (GFR 17) and a Security Bond (GFR 14). The amount of this security would be determined by the maximum physical cash they handle, not including any cheques or bank drafts. If the cashier fails to pay the annual premiums for their Fidelity Bond, they could be temporarily removed from their cash-handling duties until the premiums are paid, or face other disciplinary actions as per their employment terms. If a permanent government servant from another department temporarily fills this cashier’s role for three months due to an emergency, they might be exempted from furnishing security, provided there’s no perceived risk.

Related Provisions

Rule 306 is complemented by other provisions that further define and regulate security requirements and their management:

Rule 307 of The General Financial Rules 2017 Exemptions from Furnishing Security: This rule details specific categories of government servants who are exempt from furnishing security, such as those handling inconsiderable stores, office furniture, or library staff.
Rule 308 of The General Financial Rules 2017 Retention of Security Deposits: This rule specifies the periods for which security deposits and security bonds must be retained after a government servant vacates their post.

Learning Aids

Mnemonics

Cash Store Fidelity Premium Exemption: Helps remember the key aspects: Cash/Store handling, Fidelity Bond, Premium payment, and Exemption conditions.

Process Flowchart

StartGovt Servant HandlesCash/StoresFurnish PrescribedSecurityExecute Security Bond(GFR 14)Obtain Fidelity Bond(GFR 17)Pay Fidelity BondPremiumsPremiums Paidon Time?YesContinue DutiesNoCannot PerformDutiesEnd

Multiple Choice Questions

1. According to Rule 306 of the General Financial Rules, 2017, which government servants are required to furnish security?

A) All government servants
B) Government servants handling cash or stores
C) Government servants in administrative roles
D) Government servants with less than 5 years of service

Show Answer

Correct Answer: B) Government servants handling cash or stores

2. Rule 306 (2) of the General Financial Rules, 2017 states that the amount of security is determined based on:

A) The government servant’s salary
B) The value of government property
C) Actual cash handled, excluding account payee cheques and drafts
D) The discretion of the Head of Department

Show Answer

Correct Answer: C) Actual cash handled, excluding account payee cheques and drafts

3. Under Rule 306 (3) of the General Financial Rules, 2017, what is the consequence if a government servant fails to pay the necessary premiums for their Fidelity Bond?

A) A fine will be imposed
B) They will be transferred to a different department
C) They shall not be allowed to perform the duties of their post
D) Their promotion will be delayed

Show Answer

Correct Answer: C) They shall not be allowed to perform the duties of their post

4. Rule 306 (4) of the General Financial Rules, 2017 allows for exemption from furnishing security for a government servant officiating in a short-term vacancy under certain conditions. Which of the following is NOT one of these conditions?

A) There is no risk involved
B) The exemption is for a permanent government servant
C) The period of officiating arrangement exceeds four months
D) The Ministry or Department grants the exemption

Show Answer

Correct Answer: C) The period of officiating arrangement exceeds four months

5. Which forms are explicitly mentioned in Rule 306 (3) of the General Financial Rules, 2017 for furnishing security?

A) GFR 1 and GFR 2
B) GFR 5 and GFR 6
C) GFR 14 and GFR 17
D) GFR 19 and GFR 20

Show Answer

Correct Answer: C) GFR 14 and GFR 17

Frequently Asked Questions

Who is required to furnish security under Rule 306 of the General Financial Rules, 2017?

Government servants who actually handle cash or stores are required to furnish security.

What types of security are specified in Rule 306 of the General Financial Rules, 2017?

Security should be furnished in the form of a Fidelity Bond (GFR 17) and a Security Bond (GFR 14).

Are there any exemptions from furnishing security under Rule 306 of the General Financial Rules, 2017?

Yes, a permanent government servant officiating in a short-term vacancy (not exceeding four months) may be exempted if there is no risk involved and the competent authority grants it.

Key Takeaways

Mandatory Security: Government servants handling cash or stores must furnish security as prescribed.
Specific Forms: Security involves executing a Security Bond (GFR 14) and obtaining a Fidelity Bond (GFR 17).
Premium Compliance: Timely payment of Fidelity Bond premiums is crucial; non-payment leads to inability to perform duties.
Limited Exemptions: Exemptions are possible for permanent staff in short-term officiating roles (max 4 months, no risk, and competent authority approval).

Conclusion

Rule 306 of The General Financial Rules, 2017, establishes critical safeguards for public funds and assets by mandating security from government servants in sensitive roles. This rule, along with its provisions for specific bond types and limited exemptions, underscores the government’s commitment to financial propriety and accountability, ensuring that public resources are managed with utmost care and diligence.

Continue to Rule 307 →