Indian Government Accounting Standard 3 on Loans and Advances made by Governments. - S.O. 268(E) - Companies Law

NOTIFICATION NO. S.O. 268(E) Dated 13-2-2012 (1) Whereas, the Government of India has been empowered under clause ( 2 ) of article 293 of the Constitution to make loans to the States, subject to such conditions as may be laid down by or under any law made by Parliament, any sums required for the purpose of making such loans being chargeable to the Consolidated Fund of India; And whereas, the Union Government has been providing financial assistance to the State Governments, a substantial portion of which is in the form of loans and these loans are advanced to the States both in the form of plan and non-plan assistance. Loans are also provided by the Union Government to Foreign Governments, Government companies and Corporations, Non-Government institutions and Local bodies. And whereas, the Union Government also disburses recoverable advances to Government servants; And whereas, the State Governments disburse loans to Government Companies, Corporations, Local Bodies, Autonomous Bodies, Co-operative Institutions, Statutory Corporations, quasi-public bodies and other non-Government or private institutions. And whereas, the State Governments also disburse recoverable advances to Government Servants. Now, therefore, in exercise of the powers conferred by article 150 of the Constitution, the President, on the advice of the Comptroller Auditor General of India, hereby makes the following accounting standards, namely:- A. Short title. These accounting standards may be called the Indian Government Accounting Standards (IGAS)3. B. Objective,- The objective of the Standard is to lay down the norms for Recognition, Measurement, Valuation and Reporting in respect of Loans and Advances made by the Union and the State Governments in their respective Financial Statements to ensure complete, accurate, and uniform accounting practices, and to ensure adequate disclosure on Loans and Advances made by the Governments consistent with best international practices. C. Scope (1) This Standard applies to Loans and Advances given by the Government for incorporation and presentation in the Financial Statements of the Government. (2) The financial statements shall not be described as complying with this Standard unless they comply with all the requirements contained therein. This standard shall apply only to government accounts being maintained on a cash basis. D. Definitions, - In this Standard, unless the context otherwise requires,- ( a ) "Accounting Authority" is the authority which prepares the Financial Statements of the Governments; ( b ) "Accounting Period" means the period covered by the Financial Statements; ( c ) "Advances" are loans made to Government servants; ( d ) "carrying amount" means the net amount which the debtor owes the creditor at any point of time and it reflects the historical cost of the loan and subsequent cash flows resulting in either decrease due to repayments or write-offs or increase due to additional disbursements; ( e ) "cash basis of accounting" means the accounting transactions of an entity represent the actual cash receipts and disbursements during a financial year as distinguished from the amount due to or by the entity during the same period; ( f ) "'Charged' and 'Voted' Loans and Advances" - All loans to State Governments and a part of the same to Union Territory Governments made by the Union Government are 'charged' loans whereas all other loans and advances are 'voted' loans and advances; ( g ) "Consolidated Fund of India is the fund referred to in clause (1) of article 266 of the Constitution of India; ( h ) "Consolidated Fund of the State' is the fund referred to in clause (1) of article 266 of the Constitution of India; ( i ) "Financial Statements" means the Annual Finance Accounts of the respective Governments; ( j ) "Government" means the Union Government or any State Government or Government of any Union territory with Legislature; ( k ) "Historical Cost" is the original book value of loans and advances; ( l ) "Loanee Entity" is an entity in whose favour a loan or an advance is sanctioned by the Government; ( m ) "Loanee Group" consists of a group of loanee entities of similar nature and characteristics; ( n ) "Loans" are assistance by the Governments by providing money, goods or services directly or indirectly to the beneficiary entities which entails a contractual right to receive back equivalent moneys along with interest thereon, if any, as per terms and conditions of the loan agreements. ( o ) "Major Heads of account" represent the functions of Government as per the 'List of Major and Minor Heads of Account of Union and States'; ( p ) "Minor Heads of account" represent various programmes or schemes undertaken by departments of Government to achieve the objectives of the function represented by the major head as per the 'List of Major and Minor Heads of Account of Union and States'; ( q ) "Sub-Major Heads of account" represent the sub-functions of Government and are under the Major Heads and are as per the 'List of Major and Minor Heads of Account of Union and States'; ( r ) "Non-Plan Loans" are the loans other than those sanctioned by the Government for plan purposes; ( s ) "Plan Loans" are the loans sanctioned by the Government for plan purposes; ( t ) "Sector" consists of a grouping of specific functions or services as per the 'List of Major and Minor Heads of Account of Union and States'; ( u ) "Write-off' is when a competent authority remits or writes off any loan owing to its irrecoverability or otherwise, whereby irrecoverable portion of loan is transferred from the debt head of account to an expenditure head as loss to the Government. E A 'Loan in perpetuity' needs only to be serviced by way of payment of interest wherever so enjoined. F The term 'Advances' has been restricted in its meaning to denote loans made to Government Servants only. G. Recognition, - (1) A loan shall be recognized by the disbursing entity as an asset from the date the money is actually disbursed and not from the date of sanction and if a loan is disbursed in instalments then each instalment shall be treated as a separate loan for the purpose of repayment of principal and payment of interest, except where the competent authority specifically allows consolidation of the instalments into a single loan at the end of the concerned financial year. (2) The loans converted into equity shall be treated as conversion and shall lead to a reduction in the outstanding loan amount. (3) The debt assumption due to invocation of guarantees shall be treated as disbursement of loan, unless otherwise so specified. H. Measurement and Valuation, - (1) Historical Cost measurement shall be the basis for accounting and reporting on loans and advances made by Governments. (2) As of the last date of accounting period of Financial Statements, the carrying amount of loans shall undergo revision on account of additional disbursement and repayments or write-offs during the accounting period. (3) The method of initial measurement and valuation of Loans and Advances in the Financial Statements of the Governments is to measure at Historical Cost of the Loans and Advances. (4) Subsequent to initial valuation, Loans and Advances will be reflected in the Financial Statements at carrying amount. I. Disclosure, - (1) The Financial Statements of the Union and State Governments shall disclose the Carrying Amount of loans and advances at the beginning and end of the accounting period showing additional disbursements and repayments or write-offs. (2) An additional column in the relevant Financial Statements shall also reflect the amount of interest in arrears and this amount shall not be added to the closing balance of the loan which shall be in nature of an additional disclosure. (3) The Financial Statements of the Union Government shall disclose the following details under 'Loans and Advances made by the Union Government' in the Annual Finance Accounts of the Union Government - ( a ) the summary of Loans and Advances showing Loanee group-wise details; ( b ) the summary of Loans and Advances showing sector-wise details; ( c ) the summary of repayments in arrears from Governments and other loanee entities. (4) The Financial Statements of the Union Government shall disclose the following details under 'Detailed Statement of Loans and Advances made by the Union Government in the Annual Finance Accounts of the Union Government - ( a ) the detailed statement of Loans and Advances showing the Major Head and Minor Head-wise Details; ( b ) the detailed Statement of repayments in arrears from State or Union territory Governments; ( c ) the detailed Statement of repayments in arrears from other Loanee entities. (5) The Financial Statements of the Union Government shall disclose the following details under 'Additional Disclosures' in the Annual Finance Accounts of the Union Government - ( a ) the fresh Loans and Advances made during the year. (6) The Financial Statements of the State Governments shall disclose the following details under 'Statement of Loans and Advances made by the State Governments' in the Annual Finance Accounts of the State Government - ( a ) the summary of Loans and Advances showing Loanee group-wise details; ( b ) the summary of Loans and Advances showing Sector-wise details; ( c ) the summary of repayments in arrears from Loanee entities. (7) The Financial Statements of the State Governments shall disclose the following details under 'Detailed Statement of Loans and Advances made by the State Government in the Annual Finance Accounts of the State Government - ( a ) the detailed statement of Loans and Advances showing the Major Head and Minor Head-wise details; ( b ) the detailed Statement of repayments in arrears from Loanee entities. (8) The Financial Statements of the State Governments shall disclose the details relating to fresh Loans and Advances made during the year under 'Additional Disclosures' in the Annual Finance Accounts of the State Government- (9) 1. The Financial Statements shall reflect the Carrying Amount of loans at the beginning and end of the accounting period along with the additions made during the year by way of fresh loan disbursements to the opening balance and deductions therefrom by way of repayments or write-off of irrecoverable advances to arrive at the closing balance. 2. An additional column in the relevant Financial Statements shall also reflect the amount of interest in arrears and this amount shall not be added to the closing balance of the loan but shall only be by nature of an additional disclosure. (10) The Financial Statements of both the Union and the State Governments shall disclose details of loans and advances made to various loanees in their respective Annual Finance Accounts in three parts, namely ( a ) for the Union Government these would be 'Loans and Advances made by the Union Government'; ( b ) 'detailed Statement of Loans and Advances made by the Union Government'; and ( c ) the 'Additional Disclosures' in the Annual Finance Accounts of the Union Government. (11) The State Government will have a similar three tier presentation in Annual Finance Accounts of the State, namely ( a ) the 'Loans and Advances made by the State Government'; ( b ) the 'detailed Statement of Loans and Advances made by the State Government'; and ( c ) the 'Additional Disclosures' in the Annual Finance Accounts of the State Government. 1. The first part, Statement of Loans and Advances made by the Government, shall disclose loanee group-wise and sector-wise information on loans and advances disbursed, repaid and written-off during the year along with summarized information on repayments in arrears from various loanees. 2. The second, Detailed Statement of Loans and Advances made by the Government shall disclose the major head-wise and minor head-wise details of the loans and advances made by Governments as also detailed statements on repayments in arrears from various loanee entities. 3.1 The third, Additional Disclosures, shall incorporate additional disclosures on fresh loans and advances made during the year, provided this would not cover those given to Government employees. 3.2 The information on loans of which the terms and conditions have not yet been settled is also disclosed as a note to this Statement and it also contains a statement on quantum of loans disbursed during the year to those entities from which recoveries of earlier loans are in arrears along with the purpose for this disbursement. 3.3 The information shall be provided by the Principal Accounts Office of the Ministries and Departments. (12) 1. The 'Repayments in arrears from Loanee entities' in the Finance Accounts of the Governments shall disclose loans, the repayments on which by way of principal repayments and interest payments are in arrears, in terms of the number of such loans and the total amount in arrears thereof as against the total amount of loans given by the Government outstanding against the entity, including those not in arrear and this would help indicate the creditworthiness of the entity against which loans are outstanding. 2. Both the actual instalments due in the year and arrears of previous years may be disclosed with actual payment wherever feasible. (13) The statements shall also disclose detailed information on the quantum and terms of fresh loans advanced during the year to those loanee entities from which recoveries of earlier loans by way of repayment of principal and by way of payment of interest are in arrears and this would be shown as a disclosure in 'Additional Disclosures'. (14) In cases of conversion or restructuring or re-scheduling of loans, the restructured loan should be treated as a current loan and not classified as being in arrear and the classification of such loans would thereafter be governed by the revised terms and conditions and would be treated as in arrear, if and when, they subsequently fall in arrears in respect of interest payment and repayment of principal with reference to revised terms and conditions. J. Effective date, - This Indian Government Accounting Standard becomes effective for the Financial Statements covering periods beginning the 1 April of the year after the notification of the Standard by the Government. K. Format for disclosure, - The formats for disclosures in the Financial Statements of the Union Government and the State Governments respectively are shown hereunder: Financial Statements of the Union Government Statement of Loans and Advances made by the Union Government Section: 1 Summary of Loans and Advances: Loanee group-wise (In lakhs of rupees) Loanee Group Balance on April 1, 20 0 Disbursements during the year Repayments during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (2+3)-(4+5) Net increase/Decrease during the year (2 - 6) Interest payment in arrears 1 2 3 4 5 6 7 8 Notes: 1. Out of total amount of Rs.............lakhs paid as loans to State/Union Territory Governments, loans granted to cover gaps in resources of the State/Union Territory amounted to Rs...................lakhs 2. In pursuance of the recommendations of the ...th Finance Commission, repayments by the State/Union Territories amounting to Rs................... lakhs have been written off upto March 31, 20 1. 3. At the beginning of the year, there was a balance of Rs................lakhs sanctioned to State Governments as Ways and Means Advances. During the year, an amount of Rs....................lakhs was paid as Ways and Means Advances to State Government for clearance/avoidance of overdrafts from the Reserve Bank of India. The State Governments repaid Rs.........lakhs during the year leaving a balance of Rs..............lakhs. 4. Following are the cases of a loan having been sanctioned as 'loan in perpetuity': (In lakhs of rupees) Sl.no. Loanee entity Year of Sanction Sanction Order No. Amount Rate of Interest Section: 2 Summary of Loans and Advances: Sector-wise (In lakhs of rupees) Sector Balance on April 1, 20 0 Disbursements during the year Repayments during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (2+3)-(4+5) Net increase/ decrease during the year (2-6) Interest payment in arrears 1 2 3 4 5 6 7 8 Note: For details, refer Section 1 of Detailed Statement of loans and advances made by the Union Government. Section: 3 Summary of repayments in arrears from State or Union Territory Governments and other Loanee entities (In lakhs of rupees) Loanee-Entity Amount of arrears as on March, 31, 20 1 Earliest period to which arrears relate: Total loans outstanding against the entity on March 31, 20 1 Principal Interest Total 1 2 3 4 5 6 State/Union Territory Other Loanee entities Note: For details, refer section 2 3 of Detailed Statement of loans and advances made by the Union Government. Detailed Statement of Loans and Advances made by the Union Government Section: 1 Major and Minor Head-wise Details of Loans and Advances Out of total disbursement, amount for plan purpose has been shown in brackets below the total figure of disbursements for each major head (In lakhs of rupees) Major Head Minor Heads Balance on April, 20 0 Disbursement during the year Repayment during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (3+4)- (5+6) Net increase/ decrease during the year (3-7) Interest credited 1 2 3 4 5 6 7 8 9 Section: 2 Repayments in arrears from State or Union Territory Governments (In lakhs of rupees) Name of the State or Union Territory Government Amount of arrears as on March, 31, 20 1 Earliest period to which arrears relate Total loans outstanding against the entity on March 31, 20 1 Principal Interest Total 1 2 3 4 5 6 State or Union Territory Other loanee entities Section: 3 Repayments in arrears from other Loanee Entities or Institutions (In lakhs of rupees) Loanee-Entity Amount of arrears as on March, 31, 20 1 Earliest period to which arrears relate Total loans outstanding against the entity as on March 31, 20 1 Principal Interest Total 1 2 3 4 5 6 Additional Disclosures Fresh Loans and Advances made during the year (In lakhs of rupees) Loanee Entity Number of Loans Total Amount of loans Terms and conditions Rate of interest Moratorium period, if any 1 2 3 4 5 NOTES: Disclosures indicating extraordinary transactions relating to Loans and Advances: 1. Following are the cases of a loan having been sanctioned as 'loan in perpetuity': (In lakhs of rupees) SI.No. Year of Sanction Sanction Order No. Amount Rate of Interest 1 2 3 4 5 2. The following Loans have been granted by the Government though the terms and conditions are yet to be settled: (In lakhs of rupees) Loanee entity Number of loans Total amount Earliest period to which the loans relate 1 2 3 4 3. Fresh loans and advances made during the year to the loanee entities from whom repayments of earlier loans are in arrears: (In lakhs of rupees) Name of the loanee entity Loans Disbursed during the current year Amount of arrears as on March 31,20 1 Earliest period to which arrears relate Reasons for disbursement during the current year Rate of Interest Principal Principal Interest Total 1 2 3 4 5 6 7 8 Financial Statements of the State Government or Union Territory Government with Legislature Statement of Loans and Advances made by the State Government or Union Territorv Government Section: 1 Summary of Loans and Advances: Loanee group-wise (In lakhs of rupees) Loanee Group Balance on April 1, 20 0 Disbursements during the year Repayments during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (2+3)-(4+5) Net increase/decrease during the year (2-6) Interest payment in arrears 1 2 3 4 5 6 7 8 Following are the cases of a loan having been sanctioned as 'loan in perpetuity : (In lakhs of rupees) SI. No. Loanee entity Year of Sanction Sanction Order No. Amount Rate of interest Section: 2 Summary of Loans and Advances: Sector-wise (In lakhs of rupees) Sector Balance on April 1, 20 0 Disbursements during the year Repayments during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (2+3)-(4+5) Net increase/decrease during the year (2-6) Interest payment in arrears 1 2 3 4 5 6 7 8 Note: For details, refer Section 1 of Detailed Statement of loans and advances made by the State Government Section: 3 Summary of repayments in arrears from Loanee entities (In lakhs of rupees) Loanee Entity Amount of arrears as on March, 31, 20 1 Earliest period to which arrears relate Total loans outstanding against the entity as on March 31,20 1 Principal Interest Total 1 2 3 4 5 6 Note: For details, refer Section 2 or Detailed statement of loans and advances made by the State Government Detailed Statement of loans and Advances made by the State Government or Union Territory Government Section: 1 Major and Minor Head-wise summary of Loans and Advances Out of total disbursement, amount for plan purpose has been shown in brackets below the total figure of disbursements for each major head (In lakhs of rupees) Major Head Minor Heads Balance on April, 20 0 Disbursement during the year Repayment during the year Write-off of irrecoverable loans and advances Balance on March 31, 20 1 (3+4)- (5+6) Net increase/ decrease during the year (3-7) Interest credited 1 2 3 4 5 6 7 8 9 Section: 2 Repayments in arrears from other Loanee Entities (In lakhs of rupees) Loanee Entity Amount of arrears as on March, 31, 20 1 Earliest period to which arrears relate Total loans outstanding against the entity as on March 31, 20 1 Principal Interest Total 1 2 3 4 5 6 Additional Disclosures Fresh Loans and Advances made during the year (In lakhs of rupees) Loanee Entity Number of Loans Total Amount of loans Terms and conditions Rate of interest Moratorium period, if any 1 2 3 4 5 NOTES: Disclosures indicating extraordinary transactions relating to Loans and Advances: 1. Following are the cases of a loan having been sanctioned as 'loan in perpetuity: (In lakhs of rupees) SI.No. Year of Sanction Sanction Order No. Amount Rate of Interest 1 2 3 4 5 2. The following Loans have been granted by the Government though the terms and conditions are yet to be settled: (In lakhs of rupees) Loanee entity Number of loans Total amount Earliest period to which the loans relate 1 2 3 4 3. Fresh loans and advances made during the year to the loanee entities from whom repayments of earlier loans are in arrears: (In lakhs of rupees) Name of the loanee entity Loans Disbursed during the current year Amount of arrears as on March 31,20 1 Earliest period to which arrears relate Reasons for disbursement during the current year Rate of Interest Principal Principal Interest Total 1 2 3 4 5 6 7 8