Dual System of Government:

• During the rule of Mughal Empire, Subahdar and Diwan are the two principle officers of the Central Government. The Subahdar looked after the Nizamat functions i.e., military defence, police and administration of criminal justice, while the Diwan was the chief financial officer and in charge of revenue affairs.
• The system of Dual Government was introduced in Bengal by Robert Clive of British East India Company. It lasted from 1765 to 1772.  
• Under this system, Diwani powers were carried out by the Company and administrative power was vested with the Nawab. But in reality Dual system of Government proved a sham, for the East India Company both Nizamat as well as Diwani powers.
• The East India Company became the real master of Bengal from 1765 (after the Battle of Buxar). The firman issued by the Shah Alam granted the Diwani functions to the Company in return for an annual payment of 26 lakh rupees. The Company also controlled Nizamat powers through the right to nominate the Deputy Subahdar. It held great advantage for the British – they had power without responsibility. They controlled the finances of the provinces and its army directly and its administration indirectly. By this arrangement Nawab practically surrendered the Nizamat functions.  
• The system was abolished by Warren Hastings in 1772 and Bengal was brought under direct control of the British and the Nawabs remained as the mere pensioners of the East India Company.