Use-and-File Procedure

The use-and-file procedure is a systematic administrative process adopted in banking, finance, and public financial management to ensure orderly handling, utilisation, and preservation of records. In the Indian context, this procedure forms the backbone of institutional functioning by linking day-to-day financial operations with long-term accountability, auditability, and regulatory compliance. It establishes a structured workflow through which financial documents are examined, acted upon, and securely stored for future reference.
In banking and finance, where decisions carry legal and economic consequences, the use-and-file procedure ensures that every action is supported by documented evidence, thereby strengthening transparency and governance.

Concept and Meaning of the Use-and-File Procedure

The use-and-file procedure refers to the formal process by which documents are first used for operational or decision-making purposes and subsequently filed in an organised manner. “Use” involves scrutiny, approval, noting, or execution of financial decisions, while “file” involves classification, indexing, and storage of records after their immediate use.
This procedure ensures continuity in institutional decision-making, allowing past records to guide present and future actions. In financial institutions, it applies to loan proposals, credit appraisal notes, compliance reports, internal correspondence, and policy circulars.

Application in Banking Operations

Banks generate extensive documentation at every operational level. The use-and-file procedure ensures that these documents move through defined channels before being archived.
In lending operations, loan files typically pass through stages such as application review, credit assessment, sanction, disbursement, and monitoring. Each stage is documented and recorded, ensuring traceability and accountability. This structured movement of files reduces discretion, minimises errors, and promotes consistency in banking decisions.
Additionally, the procedure supports branch-level and head-office coordination by maintaining a clear documentary trail of approvals and instructions.

Role in Financial Regulation and Compliance

Regulatory compliance is a critical area where the use-and-file procedure assumes importance. Indian banks and financial institutions operate under guidelines issued by the Reserve Bank of India, which require meticulous documentation and record retention.
Inspection and audit processes rely heavily on filed records to verify adherence to prudential norms, capital adequacy requirements, and risk management practices. Proper implementation of the use-and-file procedure enables institutions to demonstrate compliance and respond effectively to regulatory scrutiny.

Importance in Public Finance and Financial Administration

In public sector banking and government finance, the use-and-file procedure is deeply ingrained in administrative culture. Financial approvals, budget allocations, expenditure sanctions, and subsidy disbursements are processed through files that record notes, justifications, and authorisations.
This procedure ensures fiscal discipline by preventing unauthorised spending and enabling post-facto review by audit authorities. It also promotes transparency in public financial management by maintaining a documented trail of decisions and actions.

Use-and-File Procedure in Corporate Finance

In corporate finance, the use-and-file procedure supports governance, compliance, and strategic planning. Companies maintain financial files related to borrowing, investments, mergers, and statutory reporting. These files serve as references during audits, legal proceedings, and regulatory filings.
For financial institutions, historical files are critical for credit risk assessment. Past repayment behaviour, restructuring decisions, and defaults documented in files influence future lending and investment decisions, making systematic filing an essential risk management tool.

Significance in the Indian Economy

The Indian economy relies on an extensive network of banks, non-banking financial companies, and public financial institutions. The use-and-file procedure contributes to institutional memory and financial stability by preserving records across personnel changes and organisational restructuring.
For small and medium-sized enterprises and individual borrowers, proper documentation and filing ensure continuity of credit access and fair treatment. At a macroeconomic level, reliable financial records support policymaking, data analysis, and economic planning.

Advantages of the Use-and-File Procedure

The use-and-file procedure offers several benefits in banking and finance:

• It enhances accountability and transparency in financial decisions
• It supports regulatory compliance and audit efficiency
• It ensures continuity and consistency in institutional operations
• It reduces legal and operational risks
• It preserves historical data for analysis and reference