FinMin to ask RBI to tighten travel allowance norms

After LTC scams were reported in the past, the aim is to stop misuse

After changing the rules on leave travel concession (LTC) for public-sector bank employees, the finance ministry is now planning to write to the Reserve Bank of India (RBI) and ask for changes in the apex bank’s leave fare concession (LFC) scheme. This is to ensure RBI’s officers and employees do not take a circuitous route through a foreign destination to travel within India.

“In many cases where entitlements are for business class, people travel in the economy class and claim the maximum entitled amount. If someone is travelling in a lower class, the reimbursement should be for the actual expenditure,” said a finance ministry official who did not wish to be named.

According to the finance ministry’s proposal, travel to a foreign country, or to a place within the country through a foreign destination, should not be covered under the LFC scheme. The matter is under consideration of the new financial services secretary, Hasmukh Adhia.

General Administration Manual of the central bank defines the LFC scheme as a facility under which an employee proceeding on leave, other than extraordinary leave (very long leaves usually taken for medical purposes or studies), is eligible to receive from the bank the cost of return fare for self and family members, for visiting the place of domicile in India or any other place in the country and/or outside.

Some instances were brought to the knowledge of the finance ministry where officials and their family members travelled from one Indian city to another taking air routes via international destinations.

Section 10 of the Income Tax Act provides for exemption of LTC to the employee who goes on a vacation with his or her family anywhere in India. There is no tax rebate on foreign travel.

Earlier this year, after reports of misuse of LTC facilities by employees of state-owned banks and financial institutions, the government, acting upon instructions from the Central Vigilance Commsission (CVC), had issued guidelines to limit LTC claims.

The department of personnel & training (DoPT) had informed Parliament in July about irregularities and misuse in availing of LTC by public servants in the central government, its public enterprises and public-sector banks, in violation of the guidelines.

“The matter is being investigated by the Central Bureau of Investigation. The government formulates the policies and schemes keeping in mind the various service requirements of employees and their welfare. These policies are reviewed from time to time and also amended when the situation so demands,” it said.

According to the LTC rules, if any fraudulent claim is made by a government servant, disciplinary proceedings are initiated against him or her, on the charge of preferring a fraudulent claim that might result in imposition of penalty. If found guilty, the government servant could be disallowed next two or more sets of LTC, in addition to the ones already withheld during the pendency of the disciplinary proceedings.