PFMS Full Form
What is the full form of PFMS?
The full form of PFMS is Public Financial Management System. PFMS was formerly called CPSMS (Central Plan Schemes Monitoring System). It is an online software program developed and implemented by the CGA (Controller General of Accounts) organization. It belongs to the Ministry of Finance, the Expenditure Department of the Government of India. It provides an online subsidy payment network for both non-Aadhar bank accounts and Aadhar-based bank accounts under DBT (Direct Benefit Transfer) through NPCI (National Payments Corporation of India). Many banks have arranged DBT payments through the PFMS for beneficiaries who qualify for the schemes.
History of PFMS
The Economic Report (2007-08) emphasized the need for effective financial monitoring of plan programs.
In his budget speech (2008-09), the Minister of Finance announced the establishment of a decision support and management information system.
According to the 11th Plan Document, the current accounting system for plan programs was insufficient to enable informed planning, budgeting, and effective monitoring. It also emphasized the need for a consolidated financial information system for the plan programs.
The Planning Commission's EFC (expected family contribution) approved the phased implementation of the CPSMS. The Secretary of the Treasury gave his approval in principle for the entire system. Administrative and financial approval was given for Part A of the program, with expenditures of Rs.24.25 crores.
In 2009, the system was available in all central ministries, and all state, ministry, and program reports were available to users in those ministries. The system was implemented in the four states of Madhya Pradesh, Bihar, Mizoram, and Punjab. The interface CPSMS-CBS (core banking solution) was functional and enabled real-time information exchange with banks. The Planning Commission also decided to speed up work on the system.
Responsibilities of PFMS
The main functions of PFMS are the cash flow method and a network of accounting transactions.
As part of the government's Digital India initiative, PFMS provides a reliable, efficient decision support device, and a real-time and meaningful information management system.
The biggest advantage of PFMS in India is its combination with the central banking system.
Soon PFMS will be able to bring online payment to almost any beneficiary or supplier. PFMS currently has an interface to provide real-time financial payment documents, in addition to the CBS (Core Banking System) of all banks.
Why CPSMS
Through the various ministries of the Indian central government, more than 1045 priority social sector plans are being implemented to benefit millions of beneficiaries across India. In addition, under the Additional Central Assistance program, the central government also releases funds for states to use in their region. About 3 lakh crore ($38 billion) is released every year through these channels. Given the variety and number of channels through which the money is spent, the central government finds it necessary to ensure that the money is spent according to its intended purpose and provide an accounting of the same.
CPSMS is to make the monitoring of the social sector more transparent and accountable than it has been in the past. The use of funds can be made public, and interested individuals and organizations have access to the transfers of funds to grassroots organizations and how they are used. Only about 20% of these funds are transferred to the states through the Ministry of Finance; 80% of the funds are transferred through special purpose vehicles, which have weaker internal control mechanisms than the Ministry of Finance
Current program-specific MISs (Management information system) operate with time lags and do not provide a clear picture of unspent funds in each fiscal year. While funds released by the central government are immediately recorded as expenditures in the central government accounts, their use on the ground takes time, and while commercial banks enjoy the benefit of floating, the central government must borrow to cover its budget deficit. This is because there is no system in place to quickly provide consolidated or detailed information on uses, advances, transfers, or bank balances across programs, districts, blocks, or agencies. By the time appropriation reports reach the state and headquarters levels, the data is already outdated, which severely limits its usefulness. The CPSMS will contribute to better management of the budget deficit and ultimately lead to a system of appropriation as opposed to the actual flow of funds, where banks first incur the expenses of implementing agencies and then seek reimbursement from the central government
MISs that rely on after-the-fact data feeds have the disadvantage of being inefficient, inconsistent, patchy, and always in need of reconciliation because they are not integrated into the process flow. The CPSMS attempts to address these issues and the related transparency and accountability issues associated with SPV (special purpose vehicle) implementation while retaining all the benefits of this method.
Modus Operandi
The system uses a web-enabled application developed in the Office of the Controller General of Accounts, the Indian government's top accounting agency under the Indian Ministry of Finance. As a first step, each agency receiving funds is registered in the system, including registration of all the agency's bank accounts; this information is shared with each bank's Core Banking System (CBS) for authentication.
Once registered, the CPSMS allows for one-to-one validation or payment approval for each release of funds, whether an expenditure, advance, or transfer. The appropriate instrument number and amount for each release must be entered into the system at the time of approval and prior to the actual transaction. Through the CPSMS-CBS interface, this information would be passed to the banks' CBS, and a payment instrument would only be accepted by the banks if the corresponding entry is received in the CPSMS.
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Frequently Asked Questions (FAQs)
It is administered by the Department of Expenditure, Ministry of Finance. It was designed, developed, owned, and implemented by the Controller General of Accounts.
The main goal of PFMS is to create an efficient system for the flow of funds and a spending network. PFMS also provides the various stakeholders with a reliable and meaningful management information system and an effective decision support system.
To search for government scholarships on the PFMS portal, students must visit the PFMS homepage and click on "Scheme Listing" under "Scheme Detail" on the menu bar.
Students can check their PFMS scholarship balance online through PFMS. They must provide their bank name, account number, and NSP (national scholarship portal) application ID (if they applied through NSP) to find out their current status.
Government of India's Controller General of Accounts (CGA) has developed and launched the Public Financial Management System (PFMS), an online software application.