Rule 250 — GFR

GFR

Rule 250 (1) General conditions for regulating all loans: All loans shall be regulated by the following general conditions: -
(i) A specific term shall be fixed which shall be as short as possible, within which each loan has to be fully repaid with interest due. The terms may, in very special cases, extend to thirty years.
(ii) The term is to be calculated from the date on which the loan is completely drawn or declared by competent authority to be closed.
(iii) The repayment of loans shall be effected by installments, which shall ordinarily be fixed on annual basis, and with due dates of payment being specially prescribed.
(iv) Any installment paid before its due date may be taken entirely towards the principal, provided it is accompanied by payment toward interest due up-to-date of actual payment of installment; if not, the amount of the installment shall first be adjusted towards the interest due for preceding and current periods and the balance, if any, shall alone be applied towards the principal. If, however, the payment of the installment is in advance of the due date by fourteen days or less, interest for the full period (half-year or full year, as the case may be) shall be payable.
(v) When the due date of repayment of any installment of principal or interest falls on a Sunday or a public holiday, the payment made on the next working day following the Sunday or the public holiday, shall be regarded as payment on the due date and no interest shall be charged for the day or days by which the recovery is so postponed. Exception. If an installment of principal or interest is payable on the thirty-first March of a year, and if that day happens to be a public holiday the recoveries shall be made on the immediately preceding working day. In case, the due date for the repayment of a loan or payment of interest falls on a holiday observed by the Reserve Bank of India, at which the effective credit of the same is to take place this shall be shifted to the next working day, except when the due date is thirty-first March.
(vi) The payment of interest and the repayment of principal of a loan are always to be made with reference to the calendar date on which the loan in question is paid. However, where payment of installment is in advance of the due date by fourteen days or less, interest for the full year or half year (depending on the prescribed mode of recovery) shall be charged thereon. In the case of a loan sanctioned by the Central Government to a State Government on or before thirty- first March of a year, which is adjusted in the books of the Reserve Bank of India in the month of April but in the accounts of the previous year the installment of principal and/or interest shall fall due for payment on the thirty- first March of the succeeding year and not on the anniversaries of the calendar date in April on which the inter- Governmental adjustment was carried out.
(vii) The date of drawal of a loan by a State Government shall be determined as indicated below –
(a) When monetary settlement is involved- Normally the calendar date on which amount of a loan is actually credited to the account of the State Government by the Reserve Bank is to be treated as the date of its drawal. This position shall also hold in cases where adjustment in accounts is made in one month but date of adjustment in the books of the Reserve Bank of India falls in the following calendar month. The calendar date on which the credit is actually afforded to the State Government in the books of the Reserve Bank of India in such cases shall be treated as the date of its drawal. Exception. An exception to this arrangement is in the case of loans for which credit is afforded to the recipient State Government in the month of April by the Reserve Bank of India but in the accounts of previous year. In such cases, a loan shall be deemed to have been paid on the thirty-first March of the financial year in the accounts for which the payment is adjusted. Consequently, payment of annual interest as also repayment of installment of principal in respect of such loans shall fall due on the thirty-first March of the succeeding years and not on the anniversaries of the calendar date in April on which inter- Governmental adjustment on account of such loans was carried out in the books of the Reserve Bank of India.
(b) Where no monetary settlement is involved. In regard to cases where adjustment in the books of the Accounts Offices are only involved and actual credit through the Reserve Bank of India is not necessary, the last date of the month of account in which the adjustment is effected shall be taken as the date of drawal of loan for purposes of repayment and charging interest.
(viii) In order to avoid any default in the payment of loan, the Principal Accounts Officers or Pay and Accounts Officers who maintain the detailed accounts of loans, shall issue notices in Form GFR- 19 to the loanees (other than State and Union Territory Governments) i.e. Public Sector Undertakings, statutory bodies and Government institutions etc., say, a month in advance of the due date for the repayment of any instalment of the principal and/ or interest thereon. However, omission to give notice does not give the loanees any claim to exemption from the consequences of default in the repayment of the principal and/or interest thereon.
Rule 250 (2) Before sanctioning a loan to private Institutions the lending Ministry or Department shall examine the financial health and managerial ability of such institutes.
Rule 250 (3)
(i) Before considering a loan application from parties other than State Governments and Local Administrations of Union Territories, the following requirements shall be fulfilled: -
(a) it shall be seen that there is adequate budget provision;
(b) it shall be seen whether the grant of the loan is in accordance with approved Government policy and accepted patterns of assistance.
(ii) Before approving the loan, the applicant shall be asked to furnish the following materials and information: -
(a) copies of profit and loss (or income and expenditure) accounts and balance sheets for the last 3 years;
(b) the main sources of income and how the loan is proposed to be repaid within the stipulated period;
(c) the security proposed to be offered for the loan together with a valuation of the security offered by an independent authority and a certificate to the effect that the asset offered as security is not already encumbered.
(d) Details of loan or loans taken from the Central Government or a State Government in the past, indicating amount, purpose, rate of interest, stipulated period of repayment, date of original loan and amount outstanding against the loan
(s) on the date of the application and the assets, if any, given as security;
(e) a complete list of all other loans, outstanding on the date of application and the assets given as security against them;
(f) the purpose for which the loan is proposed to be utilized and the economics of the scheme. NOTE. Where the loan is to be given to Government institution on the strength of a guarantee given by the trust managing it, similar information should be called for in respect of the trust also.
(iii) On receipt of the information called for as mentioned in
(ii) above, confidential enquiries shall be made from the other Departments of the Central Government or State Governments from which the party has taken loans, to judge the performance in regard to the previous loans. If the replies indicate that the performance was not satisfactory, the loan shall be refused. It must be analysed that the financial position of the party is sound. It shall also be ensured that the security offered is adequate and its value is at least thirty-three and one-third per cent. above the amount of the loan. If possible, an independent valuation of the security offered shall be obtained. The applicant for the loan must satisfy both the criteria for financial soundness and adequacy of security before a loan is sanctioned.
(iv) In the case of Institutions which receive Grants-in-aid from Government to meet a part of their deficits and the balance is met by the State Government and the Trustees of Management, it shall be ensured–
(a) that in computing the deficit for purpose of the Grant-in- aid, the income from the scheme, if any, earmarked for servicing the loan and the instalment of repayment of the loan and interest (if any) is not included;
(b) that as far as possible, the scheme for which the loan is given is self-financing and does not throw an additional burden on the general income of the institutions, e.g., in the case of hostels for colleges that the rents proposed are adequate;
(c) the Institution produces an undertaking from the State Government or the Management that any shortfall towards repayment of the loan and interest shall be made good by it. In the latter case the financial position of the Management (Trust) shall be investigated after calling for information on the lines of Rule 250. (3)
(i) above.
(v) Ministries or Departments of the Central Government shall lay down a procedure for periodical review of the old loans so that prompt action can be taken, if necessary, for enforcing regular payments.
Rule 250 (4) The detailed procedure to be followed in connection with the Grant of loans to local bodies shall be regulated by the provisions of the Local Authorities Loans Act and other special Acts and by rules made thereunder.

Rule 250 — GFR

GFR

Rule 250 (1) General conditions for regulating all loans: All loans shall be regulated by the following general conditions: -
(i) A specific term shall be fixed which shall be as short as possible, within which each loan has to be fully repaid with interest due. The terms may, in very special cases, extend to thirty years.
(ii) The term is to be calculated from the date on which the loan is completely drawn or declared by competent authority to be closed.
(iii) The repayment of loans shall be effected by installments, which shall ordinarily be fixed on annual basis, and with due dates of payment being specially prescribed.
(iv) Any installment paid before its due date may be taken entirely towards the principal, provided it is accompanied by payment toward interest due up-to-date of actual payment of installment; if not, the amount of the installment shall first be adjusted towards the interest due for preceding and current periods and the balance, if any, shall alone be applied towards the principal. If, however, the payment of the installment is in advance of the due date by fourteen days or less, interest for the full period (half-year or full year, as the case may be) shall be payable.
(v) When the due date of repayment of any installment of principal or interest falls on a Sunday or a public holiday, the payment made on the next working day following the Sunday or the public holiday, shall be regarded as payment on the due date and no interest shall be charged for the day or days by which the recovery is so postponed. Exception. If an installment of principal or interest is payable on the thirty-first March of a year, and if that day happens to be a public holiday the recoveries shall be made on the immediately preceding working day. In case, the due date for the repayment of a loan or payment of interest falls on a holiday observed by the Reserve Bank of India, at which the effective credit of the same is to take place this shall be shifted to the next working day, except when the due date is thirty-first March.
(vi) The payment of interest and the repayment of principal of a loan are always to be made with reference to the calendar date on which the loan in question is paid. However, where payment of installment is in advance of the due date by fourteen days or less, interest for the full year or half year (depending on the prescribed mode of recovery) shall be charged thereon. In the case of a loan sanctioned by the Central Government to a State Government on or before thirty- first March of a year, which is adjusted in the books of the Reserve Bank of India in the month of April but in the accounts of the previous year the installment of principal and/or interest shall fall due for payment on the thirty- first March of the succeeding year and not on the anniversaries of the calendar date in April on which the inter- Governmental adjustment was carried out.
(vii) The date of drawal of a loan by a State Government shall be determined as indicated below –
(a) When monetary settlement is involved- Normally the calendar date on which amount of a loan is actually credited to the account of the State Government by the Reserve Bank is to be treated as the date of its drawal. This position shall also hold in cases where adjustment in accounts is made in one month but date of adjustment in the books of the Reserve Bank of India falls in the following calendar month. The calendar date on which the credit is actually afforded to the State Government in the books of the Reserve Bank of India in such cases shall be treated as the date of its drawal. Exception. An exception to this arrangement is in the case of loans for which credit is afforded to the recipient State Government in the month of April by the Reserve Bank of India but in the accounts of previous year. In such cases, a loan shall be deemed to have been paid on the thirty-first March of the financial year in the accounts for which the payment is adjusted. Consequently, payment of annual interest as also repayment of installment of principal in respect of such loans shall fall due on the thirty-first March of the succeeding years and not on the anniversaries of the calendar date in April on which inter- Governmental adjustment on account of such loans was carried out in the books of the Reserve Bank of India.
(b) Where no monetary settlement is involved. In regard to cases where adjustment in the books of the Accounts Offices are only involved and actual credit through the Reserve Bank of India is not necessary, the last date of the month of account in which the adjustment is effected shall be taken as the date of drawal of loan for purposes of repayment and charging interest.
(viii) In order to avoid any default in the payment of loan, the Principal Accounts Officers or Pay and Accounts Officers who maintain the detailed accounts of loans, shall issue notices in Form GFR- 19 to the loanees (other than State and Union Territory Governments) i.e. Public Sector Undertakings, statutory bodies and Government institutions etc., say, a month in advance of the due date for the repayment of any instalment of the principal and/ or interest thereon. However, omission to give notice does not give the loanees any claim to exemption from the consequences of default in the repayment of the principal and/or interest thereon.
Rule 250 (2) Before sanctioning a loan to private Institutions the lending Ministry or Department shall examine the financial health and managerial ability of such institutes.
Rule 250 (3)
(i) Before considering a loan application from parties other than State Governments and Local Administrations of Union Territories, the following requirements shall be fulfilled: -
(a) it shall be seen that there is adequate budget provision;
(b) it shall be seen whether the grant of the loan is in accordance with approved Government policy and accepted patterns of assistance.
(ii) Before approving the loan, the applicant shall be asked to furnish the following materials and information: -
(a) copies of profit and loss (or income and expenditure) accounts and balance sheets for the last 3 years;
(b) the main sources of income and how the loan is proposed to be repaid within the stipulated period;
(c) the security proposed to be offered for the loan together with a valuation of the security offered by an independent authority and a certificate to the effect that the asset offered as security is not already encumbered.
(d) Details of loan or loans taken from the Central Government or a State Government in the past, indicating amount, purpose, rate of interest, stipulated period of repayment, date of original loan and amount outstanding against the loan
(s) on the date of the application and the assets, if any, given as security;
(e) a complete list of all other loans, outstanding on the date of application and the assets given as security against them;
(f) the purpose for which the loan is proposed to be utilized and the economics of the scheme. NOTE. Where the loan is to be given to Government institution on the strength of a guarantee given by the trust managing it, similar information should be called for in respect of the trust also.
(iii) On receipt of the information called for as mentioned in
(ii) above, confidential enquiries shall be made from the other Departments of the Central Government or State Governments from which the party has taken loans, to judge the performance in regard to the previous loans. If the replies indicate that the performance was not satisfactory, the loan shall be refused. It must be analysed that the financial position of the party is sound. It shall also be ensured that the security offered is adequate and its value is at least thirty-three and one-third per cent. above the amount of the loan. If possible, an independent valuation of the security offered shall be obtained. The applicant for the loan must satisfy both the criteria for financial soundness and adequacy of security before a loan is sanctioned.
(iv) In the case of Institutions which receive Grants-in-aid from Government to meet a part of their deficits and the balance is met by the State Government and the Trustees of Management, it shall be ensured–
(a) that in computing the deficit for purpose of the Grant-in- aid, the income from the scheme, if any, earmarked for servicing the loan and the instalment of repayment of the loan and interest (if any) is not included;
(b) that as far as possible, the scheme for which the loan is given is self-financing and does not throw an additional burden on the general income of the institutions, e.g., in the case of hostels for colleges that the rents proposed are adequate;
(c) the Institution produces an undertaking from the State Government or the Management that any shortfall towards repayment of the loan and interest shall be made good by it. In the latter case the financial position of the Management (Trust) shall be investigated after calling for information on the lines of Rule 250. (3)
(i) above.
(v) Ministries or Departments of the Central Government shall lay down a procedure for periodical review of the old loans so that prompt action can be taken, if necessary, for enforcing regular payments.
Rule 250 (4) The detailed procedure to be followed in connection with the Grant of loans to local bodies shall be regulated by the provisions of the Local Authorities Loans Act and other special Acts and by rules made thereunder.

Rule 250 — GFR

Original Rule Text

Rule 250 — GFR

Original Rule Text