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TMI BlogGuarantees given by Governments : Disclosure RequirementsX X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Indian Government Accounting Standards specifies the disclosure requirements in the Financial Statements of the Union and the State Governments of Guarantees given by Governments, namely:- Guarantees given by Governments: Disclosure Requirements Introduction.- A. (1) The Union Government and the State Governments give Guarantees for repayment of borrowings within such limits, if any, as may be fixed upon the security of the Consolidated Fund of India or of the State, as the case may be, in terms of articles 292 and 293 of the Constitution. Guarantees are also given by the Union Government for payment of interest on borrowings, repayment of share capital and payment of minimum annual dividend, payment against agreements for suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges by the companies and corporations. Similarly, guarantees are also given by the State Governments and Union Territory Governments (with legislature). (2) As the statutory corporations, Government companies, co-operative institutions, financial institutions, autonomous bodies and authorities are distinct legal entities, they are responsible for their debts. Their financial obligations may be guaranteed by a Government and thus the Government has a commitment to see that these are fulfilled. When these entities borrow directly from the market, it reduces a Government's budgetary support to them and the magnitude of a Government's borrowings. However, it adds to the level of Guarantees given by the Governments. In consideration o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in the Government.-means the tracking (monitoring) unit or Authority for Guarantees and in its absence, the Ministry or the Department of Finance, as the case may be; (c) Automatic Debit Mechanism.-means the arrangement whereby the Government's cash balance is affected on a specified date or on the occurrence of specified events to meet certain obligations arising out of Guarantees given by it; (d) Financial Statements.-mean the Annual Finance Accounts of the Governments; (e) Guarantee.-means an accessory contract, by which the promisor undertakes to be answerable to the promisee for the debt, default or miscarriage of another person, whose primary liability to the promisee must exist or be contemplated; and (f) Structured P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees on the date of Financial Statements; (d) details concerning Automatic Debit Mechanism and Structured Payment Arrangement, if any; (e) whether the budget documents of the Government contain details of Guarantees; (f) details of the tracking unit or designated authority for Guarantees in the Government; and (g) other material details. F. The Financial Statements disclose whether details of Guarantees are published in the annual budget presented to the Parliament and State Legislature, as the case may be. G. In order that a proper database is maintained for all Guarantees annually sanctioned, annulled and outstanding, a tracking unit for Guarantees is usually designated in the Ministry or Department of Finance in the respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as below:- Class (i) Guarantees given to the Reserve Bank of India, other banks and financial institutions for repayment of principal and payment of interest, cash credit facility, financing seasonal agricultural operations and for 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, foreign contractors, foreign suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Statements of the Union Government as well as the State Governments or Union Territory Governments with legislature. Sector (No. of Guarantees within bracket) Maximum amount guaranteed during the year (Rs.) Outstanding at the beginning of the year (Rs.) Additions during the year (Rs.) Deletions (other than invoked) during the year (Rs.) 1 2 3 4 5 Invoked during the year (Rs.) Outstanding at the end of the year (Rs.) Guarantee Commission or fee (Rs.) Other material details Discharged Not Discharged Receivable Received 6 7 8 9 10 11 Formats for disclosure M. Formats for class-wise and sector-wise disclosures in the Financial Statements of the Union Government and the State/UT Governments respectively are given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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