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Glitches in ePEMS, banks face issues

The introduction of electronic Public Expenditure Management System (ePEMS) last month has left banks and civil servants experiencing some hiccups.

This is because the monthly loan installments  or EMIs and insurance premiums of civil servants are deducted at source, and credited to their loan accounts with the respective banks. After deducting taxes and other contributions, rest of the salary of a civil servant is deposited in his or her respective savings accounts.

However, the finance ministry has issued a notification on August 16 stating that only statutory and common deductions like taxes, health contribution, provident fund, house rent for government quarters, GIS and welfare fund would be facilitated by ePEMS.

The notification also stated that other deductions and remittances, including the loan EMI shall be made through mobile banking Apps, standing instructions the budgetary bodies issues to the bank and linking individual loan deduction with the saving accounts.

“Ideally, government accountants should not be deducting loan of civil servants,” an official from the finance ministry said.

However, banks claim that their clients, before the loan approval, are mandated to get an undertaking from respective finance officers vouching that EMIs would be deducted by the agencies and remit it to their respective accounts. “This process is mandatory with all the civil servant availing loans to ensure timely repayment and suddenly government agencies are saying that they will not do so,” a banker said.

After experiencing load defaulters initially, few banks claim that the number of defaulters has decreased substantially over the past month and that various channels like mobile banking are used to pay loan EMIs. “This could be because there wasn’t enough awareness carried out by the ministry among the civil servants, initially. Now more are aware of it. But there are also willful defaulters, which makes  the bank’s job difficult,” the banker said.

Bank of Bhutan is fortunate since most of the government agencies and civil servants have their saving account with it. Initially, an official from BoB said there were some lapses because there were minor mistakes with the information, which their system rejected.

An official from Department of Public Accounts with the finance ministry said that the system would reject transactions even if there are minor errors in the spellings. “Some accounts were in the name of their children while there were few errors in account numbers,” he said.

But this has been rectified. The BoB official said that the bank has reversed all faulty transactions and that there are not many issues currently.

However, there are problems when remitting EMIs from BoB, where most of the civil servants have their saving accounts, to other banks.

An official from a private bank said that inter-bank transaction system, which is the Global Interchange for Financial Transaction (GIFT), is also new and has its own technical glitches. “If GIFT is robust and maintained at real time, this issue can be resolved,” he said.

The GIFT platform, maintain by the central bank closes at 3PM and standing instructions cannot be performed. Standing instructions are set of command to perform certain transactions. These commands are pre-punched in the system and the operation is performed automatically once the bank close all transactions.

This means that for standing instructions to device, banks must close transactions before 3PM as the GIFT platform shuts down at the same time. This is the issue, banks other than BoB, are facing. Banking channels such as mobile banking and internet banking has helped in addressing this issue, but not for the willful defaulters and at a time when these systems are down.

The RMA governor, Dasho Penjore said that people should give time for the system to mature. In the transition phase, he said, such technical glitches could arise. “It will be handled soon,” he said.


The system

An official from public accounts department said that financial rules and regulations does not allow government agencies to deduct loans, which the civil servants owe to the banks.

“But we are not washing off our hands,” he said adding that the ministry has been following up with defaulters and urging them to pay their loans. “We will do that until the system stabilizes.”

He said banks need to come up with an interface where the system of one bank supports the others.

On the ministry’s side, he said that 70 percent of the accountants across the country have been trained last year. While the remaining would be trained soon, a refresher course would also be offered.

The feedback, according to the official is that most accountants find it user friendly. “We have also distributed manuals for them to read and it is easily understandable,” he said.

“Even the vendors, who provide goods and services to government agencies are finding it efficient and effective,” he said.

The e-Pems, a finance ministry’s initiative to digitise government expenditure and payment system has recorded about Nu 6.3B worth of transactions in two months, of which Nu 2.8B pertains to salaries.

The e-Pems is expected to promote transparency and accountability. Under this system, all service providers to the government agencies should be registered and payments could be directly made to individual accounts.

There are instances where private entities have to rely on the accountants to write cheques. This would no more be the case, should e-Pems prove a success.

For example, a supplier registered on e-PEMS can directly bill the government agencies and money would be electronically transferred to the individual account after verification.

However, all e-PEMS transactions have to be routed through the BoB since most of the government agencies maintain their account with BoB.

This is why the GIFT is important tool to enable e-PEMS transaction to other banks.

As of now, the finance ministry, RMA and the banks are working together to sort out issues.

Tshering Dorji

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