The Finance Division on Tuesday decided not to accept any payments through manual challans from July 1 in a bid to reduce high interest payments on government borrowing.

The decision was revealed in a circular issued on the day against the backdrop of findings that many agencies had still been maintaining manual challans.

Since the 2018–19 financial year, automated challans (a-challans) have been introduced for receiving all government revenues online.

The Finance Division said in its circular that the use of manual challans was inconsistent with the system of depositing receipts into the single treasury account maintained by the Bangladesh Bank.

Without naming the errant government bodies, the division also said that the submission of government revenues through manual challans and the depositing of funds into different accounts by those bodies were contrary to the rules.

Explaining how the violation prevented the Treasury and Debt Management Wing of the Finance Division from assessing the actual amount of cash in the banking channel, the circular said that the wing had also failed to utilise the funds to meet the government’s daily needs.

Consequently, the Treasury and Debt Management Wing has been forced to borrow from domestic and overseas sources at high interest rates, the circular added.

Calling it imprudent for maintaining fiscal discipline, the Finance Division said that the government had to incur high interest payments every year.

The projected interest payments in the forthcoming national budget for the 2026-27 financial year is likely to grow to Tk 1,42,000 crore — a fourfold rise in a decade.

Finance Division officials said that about Tk 1,15,000 crore would be allocated in the national budget for interest payments on domestic borrowing, while some Tk 27,000 crore would be set aside for external borrowing.

In the FY 2016-2017, the government had spent Tk 35,392 crore to pay the interests — Tk 33,551 crore for the domestic borrowing and Tk 1,842 crore for the external borrowing.

About Tk 2,20,000 crore in revenues was collected through automated challans against the overall incomes of Tk 4,09,812 crore in the FY 2023-24, according to the iBAS++, an integrated financial management information system.

In its circular, the Finance Division also directed all ministries and their subordinate bodies to deactivate by July 1 the separate accounts they maintain for deposits.

They were also asked to transfer the funds kept in different accounts to the a-challan system by June 30.