Para 10.18 — MSO (A&E)
Original Rule Text
10.18 In scrutinising the transactions connected with sinking Funds regularly constituted for the redemption of loans raised by the State Government, 'the Accountant General' should satisfy himself that credits to these Funds are in accordance with the undertakings given by Government and set forh in the prospectus of the loans and that payments are eventually utilised for the purpose for which the Funds themselves were created.
# RESERVES AND RESERVE FUNDS
What This Means
When examining sinking funds established for repaying State Government loans, the Accountant General must verify two things: first, that the credits (contributions) to these funds match the commitments made by the government in the loan prospectus; and second, that the money in these funds is ultimately used for its intended purpose, which is redeeming the loans.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Sinking fund credits must match undertakings in the loan prospectus
- 2Fund payments must be used for the purpose the fund was created (loan redemption)
- 3AG must verify both the inflow and outflow of sinking fund transactions
- 4This prevents governments from under-funding or misusing sinking funds
Practical Example
A State Government raised Rs. 2,000 crore through market loans with a prospectus promising annual sinking fund contributions of Rs. 200 crore. The AG reviews the sinking fund accounts and finds only Rs. 150 crore was credited this year. Further, Rs. 30 crore from the fund was used for a road project instead of debt redemption. The AG raises both issues with the government, insisting on full compliance with the prospectus commitment.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the AG's role with sinking funds?▼
What is a loan prospectus in government borrowing?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.