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Guarantees given by Governments Disclosure Requirements

IGAS - 1 - Companies Law - IGAS - 1 - Indian Government Accounting Standards IGAS - 1 NOTIFICATION NO. S.O. 2979(E), DATED 20-12-2010 In exercise of the powers conferred by article 150 of the Constitution, the President of India, on the advice of the Comptroller and Auditor General of India, hereby makes the following accounting standard namely:- Indian Government Accounting Standards, Guarantees given by Governments: Disclosure Requirements relating to the form of accounts of the Union, States .....

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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 supplies of materials and equipments on credit basis on behalf of the State Governments, Union territories, local bodies, railways, Government companies or corporations, joint stock companies, financial insti .....

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to by the Union Government with international financial institutions, foreign lending agencies, foreign Governments, contractors and consultants towards repayment of principal, payment of interest and payment of commitment charges on loans. The Union Government also gives performance guarantees for fulfilment of contracts or projects awarded to Indian companies in foreign countries as well as foreign companies in foreign countries besides counter-guarantees to banks in consideration of the banks .....

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mpanies, 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 Guarantee .....

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pect of Guarantees given by the Union, the State Governments and Union Territory Governments (with legislature) in their respective Financial Statements to ensure uniform and complete disclosure of such Guarantees. C. Scope - (1) This Standard applies to preparation of the Statement of Guarantees for inclusion and presentation in the Financial Statements of the Governments. Financial Statements should not be described as complying with this Standard unless these comply with all its requirements. .....

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ments of the Government; (b) Authority 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 .....

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er stipulations. E. Disclosure - (1) The Financial Statements of the Union Government, the State Governments and the Union Territory Governments (with legislature) shall disclose the following details concerning class or sector of Guarantees in the format specified in paragraph M: (a) maximum amount for which Guarantees have been given during the year, additions and deletions (other than invoked during the year) as well as Guarantees outstanding at the beginning and end of the year; (b) amount o .....

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or Reserve Fund exists and its details including disclosure of balance available in the Fund at the beginning of the year, any payments made and balance at the end of the year; (c) details of subsisting external foreign currency guarantees in terms of Indian 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 tr .....

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e Governments. The Financial Statements disclose the details concerning the tracking unit for guarantees or any concerned authority in charge of this responsibility. H. Many Governments have set up either a Guarantee Redemption Fund or a Guarantee Reserve Fund. Some Governments have made; arrangement for Automatic Debit Mechanism for discharging the obligations arising out of such Guarantees executed by the Government. There are also Structured Payment Arrangements. The Financial Statements disc .....

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Fund and (b) where the guarantee Reserve Fund does not exist, by debit to "Irrecoverable loan written off under the function for which the loan has been guaranteed and where the purpose cannot be identified, by debit to "Miscellaneous General Services". J. For the purposes of paragraphs E and M the class or sector under which disclosure in the Financial Statements of the Union Government, the State Governments and Union Territory Governments (with legislature) shall be made are a .....

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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 suppliers and foreign consultants towards repayment of principal, payment of interest or commitment charges on loans and for payment against supplies of material and equipment or for services rendered; (iv) Counter-guarantees to banks in consideration of the ban .....

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in foreign countries; (viii) Any other. Sector (i) Power; (ii) Co-operative; (iii) Irrigation; (iv) Roads and Transport; (v) State Financial Corporations; (vi) Urban Development and Housing; (vii) Other Infrastructure; (viii) Any other. Effective date - K. This Indian Government Accounting Standard becomes effective for Financial Statements covering periods beginning on or after 1-4-2010 for class-wise disclosures in the Financial Statements of the Union Government and sector-wise disclosures in .....

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