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«Government of India Ministry of Finance Department of Expenditure General Financial Rules, 2005* (* Amendments issued upto March 2010 have been added as ...»

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(ii) The concerned Ministry or Department shall examine the proposal in consultation with the Financial Adviser in the same manner as a proposal for loan. While examining the proposal the following considerations shall be kept in view :a) Public interest which the guarantee is expected to serve.

(b) Credit worthiness of the borrower to ensure that no undue risk is involved.

(c) Terms of the borrowing take into account the yields as applicable on Government paper of similar maturity.

(d) The conditions prescribed in the guarantees in order to ensure continued credit worthiness of the borrower.

(iii) After examination in the concerned Ministry or Department, all proposals for extending guarantees shall be referred to Ministry of Finance (Budget Division) for approval. No guarantees shall be given without the approval of the Ministry of Finance (Budget Division).

(iv) Government guarantees shall not be provided to the private sector.

(v) Government guarantees should normally not be extended for external commercial borrowings.

(vi) Government guarantees may be given on all soft loan components of the bilateral aid. However guarantee should not be given for the commercial loan components of such aid. In case of power sector, extension of Government guarantee even in respect of commercial components may be considered on a case to case basis.

(vii) Government of India guarantee will not be given in cases of grants. However, if the donor or insists on ensuring performance, the same may be listed as a negotiating condition for getting the grant.

(viii) The conditions, if any which should be made by Government while giving the guarantee e.g. period of guarantee, levy of fee to cover risk representation for Government on the Board of Management, Mortgage or lien on the assets, submission to Government of periodical reports and accounts, right to get the accounts audited on behalf of Government etc. Even if fee, representation and mortgage are not considered necessary, the right to verify the continued credit–worthiness of the borrower should be ensured.

(2) The Department of Economic Affairs (DEA) shall act as the nodal agency for external borrowings. The credit divisions of DEA shall prescribe limits for external borrowings, sector wise or lender wise and play a role in negotiating external assistance and evolving monitoring systems. In the case of external borrowings where guarantees, are sought to be provided, credit divisions of Department of Economic Affairs should obtain prior approval of Budget Division.

Rule 247. Borrowings from multilateral agencies by Central Public Sector Undertakings :

(a) All borrowings from the multilateral agencies by Central Public Sector Undertakings would be direct (without Government of India’s intermediation) on the terms as agreed mutually between the borrower and the lender and approved by the Government of India. However, where such terms involve grant of Government of India Guarantee, prior approval of the Budget Division of the Ministry of Finance may be obtained.

(b) The borrowing should relate to approved Projects.

(c) Wherever guarantee is to be given by Government of India, the borrower shall enter into an agreement with the Government of India for the payment of guarantee fee on the principal amount of the loan drawn and loan outstanding from time to time.

(d) The borrower shall bear the exchange risk and get the funds directly on terms and conditions prescribed by the lending agency.

Rule 248. Levy of Guarantee Fees :

(1) The rates of fee on guarantees are laid down by the Budget Division in the Ministry of Finance, Department of Economic Affairs, from time to time. The rates of guarantee fee prevalent in July, 2004 are given in Appendix - 16. Ministries or Departments should levy the prescribed fee in respect of all cases. The fees are also to be levied in respect of non-fund based borrowings or credits (viz. letters of credit, Bank guarantees etc.). In case of any doubt with regard to the categorisation of any particular undertaking or organization or the nature of borrowing for the purpose of levy of fee, the matter may be referred to the Budget Division for clarification. The Ministries or Departments should also take adequate steps to ensure prompt recovery of the prescribed fees.

(2) The guarantee fee should be levied before the guarantee is given and thereafter on first April every year.

The rate of guarantee fee is to be applied on the amount outstanding at the beginning of the guarantee year. Where the guarantee fee is not paid on the due date, fee should be charged at double the normal rates for the period of default.

Rule 249. Review of Guarantees (1) All Ministries or Departments shall ensure that all guarantees are reviewed every quarter.

The monitoring or review undertaken should examine whether the borrower is discharging repayment obligations or interest obligations as per terms of the loan agreement. The Financial Advisers of the Ministries or Departments should undertake these reviews.

(2) The Financial Adviser of the Ministries or Departments would be responsible for ensuring that the periodical reviews are carried out by the Ministries or Departments concerned. They shall also ensure that a register of guarantees in Form GFR 43 is maintained :i) to keep a record of guarantees;

(ii) to retain information required from time to time in respect of guarantees;

(iii) to keep record of the periodical reviews to see that these are carried out regularly;

(iv) to keep record of levy and recovery of guarantee fee;

(v) to send data as contained in Form GFR 43, duly updated every quarter to the Budget Division in the Ministry of Finance, Department of Economic Affairs by tenth of the month following the quarter.

(3) In respect of guarantees issued by the Ministry of Finance for external loans, the respective credit divisions shall conduct a quarterly review. For this purpose the Financial Adviser (Finance) shall ensure the maintenance of the required registers, as well as ensure that the periodical reviews are carried out by the concerned credit divisions, and report forwarded to the Budget Division in the Form GFR 43. In cases, where the guarantees on external loans are issued by the concerned administrative Ministry, that Ministry would be responsible for conducting the review.

(4) Classification of guarantees : For the purpose of record keeping, guarantees shall be classified as under:i) guarantees given to the RBI, other banks and industrial and financial institutions for repayment of principal and payment of interest, cash credit facility, financing seasonal agricultural operations and/or providing working capital to companies, corporations and cooperative societies and banks;

(ii) guarantees given for repayment of share capital, payment of minimum annual dividend and repayment of bonds or loans, debentures issued or raised by the statutory corporations and financial institutions;

(iii) guarantees given in pursuance of agreements entered into by the Government of India with international financial institutions, foreign lending agencies, foreign governments, contractors, suppliers, consultants etc., towards repayment of principal, of interest or commitment charges on loans etc., and /or for payment against supplies of material and equipment;

(iv) counter guarantees to banks in consideration of the banks having issued letters of credit or authority to foreign suppliers for supplies made or services rendered;

(v) guarantees given to Railways or State Electricity Boards and other entities for due and punctual Payment of dues by companies or Corporation;

(vi) performance guarantees given for fulfillment of contracts or projects awarded to Indian companies in foreign countries;

(vii) performance guarantees given for fulfillment of contracts or projects awarded to foreign companies in foreign countries.

(viii) Others.

Rule 250. Accounting for Guarantees : A statement showing the guarantees given by the Central Government is required to be annexed to the Detailed Demands for grants prepared by the Ministries or Departments.

The statements should show the position upto thirty-first March of the second preceding year, to the year to which the Budget documents relate. For example, the Budget documents for 2004-05 will show the position of guarantees outstanding as at thirtyfirst March 2003. The form in which the statement of guarantees is to be shown would be as prescribed in the Budget circulars. Where interest payments are also guaranteed, the outstanding shown under the columns for sums guaranteed and outstanding should disclose the interest element outstanding, if any, separately. While furnishing the summary statement of guarantees to the Finance Ministry, the Ministries or Departments should ensure and certify that the amounts shown tally with the total figures in the statement to be included in the Detailed Demands for grants. While furnishing the summary statements, the Ministries or Departments should also certify that the information tallies with the material furnished to the Controller General of Accounts for the purpose of inclusion in the Finance Accounts of the relevant year.

Rule 251. Invocation of Guarantee : In the event of invocation of a guarantee, the obligation may be discharged by sanctioning loan equal to the amount of guarantee outstanding with the approval of Budget Division, Ministry of Finance.

However, any payment on this account will finally be charged to the Guarantee Redemption Fund maintained in the Public Account.

Rule 252. Furnishing of data regarding Guarantees : With a view to enable the Ministry of Finance to examine cases of Government of India guarantees and extension thereto, all Ministries or Departments should furnish to that Ministry, data of certain operational parameters of the Public Sector Undertaking or Entity.

In case the accounts of the Public Sector Undertaking have been audited by the Comptroller & Auditor General of India under Section 619 (4) of the Companies Act, the effect of the comments of the Comptroller & Auditor General of India on the Public Sector Undertaking’s profitability should be brought out. Further, where BIFR targets have been assigned to the Company, the actuals vis-à-vis targets for the preceding three years should be indicated. The data should be furnished in the Form GFR 44 along with the proposal.


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Rule 253. Proposal for additions to Establishment :

(1) All proposals for additions to establishment shall be submitted to sanctioning authority in accordance with the instructions contained in Rule 11 of the Delegation of Financial Powers Rules and other such instructions which may be prescribed in this regard.

(2) All proposals for creation of a new establishment or a revision in an existing establishment, whether temporary or permanent in excess of delegated powers should contain, inter alia:a) the present cost of the establishment in existence;

(b) cost implications of the change proposed giving details of pay and allowances of post(s) proposed;

(c) expenditure in respect of claim to pension or gratuity or other retirement benefits that may arise in consequence of the proposals;

(d) details on how the expenditure is proposed to be met including proposed re-appropriations.

(3) A full review of the justification for continuation or conversion of temporary posts in consultation with Integrated Finance or Ministry of Finance where necessary, should precede any order for continuation of temporary posts or conversion into permanent posts.

(4) All proposals for increase in emoluments for an existing post(s) shall be referred to the Ministry of Finance for approval.

Rule 254. Adjustment in Appointments : A Ministry or Department competent to make appointment to posts in any cadre may make appointments in a lower post in the cadre to the extent of vacancies left unfilled in the higher posts.

Rule 255. Transfer of Charge :

(1) A report of transfer of a Gazetted Government servant duly made in Form GFR 33 and signed both by the relieved and relieving Government servants, shall be sent on the same day to the Head of the Department or other Controlling Officers concerned except in the following types of cases in respect of which report of transfer of charge need not be signed both by the relieving and relieved Government servants simultaneously and may be sent independently:i) Where a Gazetted Government servant assumes charge of a newly created or vacant post or relinquishes charge of a post which has been abolished.

(ii) Where a Gazetted government servant vacates a post for a short period and no formal appointment or officiating arrangement is made in his place.

(iii) Where due to administrative exigencies a government servant is required to move to another post relinquishing his post against local arrangement.

(2) In cases in which the transfer of charge involves assumption of responsibility for cash, stores, etc., the following instructions should be observed :i) The Cash Book or imprest account should be closed on the date of transfer and a note recorded in it over the signatures of both the relieved and the relieving Government servants, showing the cash and imprest balances and the number of unused cheques/receipt books, if any, made over and received by them respectively.

(ii) The relieving Government servant should bring to notice anything irregular or objectionable in the conduct of business that may have come officially to his notice. He should examine the accounts, count, weight and measure certain selected articles, as applicable, in order to test the accuracy of the returns.

(iii) In the case of any sudden casualty occurring or any emergent necessity arising for a Government servant to relinquish his charge, the next senior officer of the department present shall take charge.

When the person who takes charge is not a Gazetted Government servant, he must at once report the circumstances to his nearest departmental superior and obtain orders as to the cash in hand, if any.

(3) The additional procedure to be followed by an Audit Officer or Accounts Officer, etc., in making over charge of his functions in connection with the Charitable Endowments and other Trust Accounts is laid down in Appendix -12.

Rule 256. Date of Birth : Every person newly appointed to a service or a post under Government shall, at the time of the appointment, declare the date of birth by the Christian era with confirmatory documentary evidence such as a Matriculation Certificate, where prescribed qualification for appointment is Matriculation or above.

In other cases Municipal Birth Certificate or Certificate from the recognised school last attended shall be treated as a valid document.

Rule 257.

(1) Service Book : Detailed Rules for maintenance of Service Books are contained in SR 196 to 203. Service Books maintained in the establishment should be verified every year by the Head of Office who, after satisfying himself that the services of Government servants concerned are correctly recorded in each Service Book shall record the following certificate “Service verified from ……(the date record from which the verification is made)……….. upto ………(date)………….”.

(2) The service book of a government servant shall be maintained in duplicate. First copy shall be retained and maintained by the Head of the Office and the second copy should be given to the government servant for safe custody as indicated below :a) To the existing employees - within six months of the date on which these rules become effective.

(b) To new appointees - within one month of the date of appointment.

(3) In January each year the Government servant shall handover his copy of the Service Book to his office for updation. The office shall update and return it to the Government Servant within thirty days of its receipt.

(4) In case the Government servants’ copy is lost by the government servant, it shall be replaced on payment of a sum of Rs. 500/-.

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