Para 6.2 — MSO (A&E)
Original Rule Text
6.2 In respect of loans and advances, the detailed accounts of which are kept by him, the Accountant General should report without delay any default in payment either of principal or of interest to the authority which sanctioned the loan or the advance. If that authority enforces any penal interest upon the overdue instalments of interest or principal and interest or if penal interest is recoverable on overdue instalments of Principal/interest under the rules and orders issued by that authority it shall be
What This Means
When the AG maintains detailed loan accounts, he must promptly report any default in payment of principal or interest to the authority that sanctioned the loan. If the sanctioning authority enforces penal interest on overdue amounts (or if penal interest is automatically applicable under the rules), the AG must account for it. Quick reporting of defaults is critical because delays can allow small defaults to snowball into large irrecoverable amounts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1The AG must report loan defaults without delay to the sanctioning authority
- 2Defaults in both principal and interest payments must be reported
- 3Penal interest on overdue amounts may be enforced by the sanctioning authority
- 4Penal interest may also be automatically recoverable under existing rules
- 5Timely reporting prevents defaults from becoming irrecoverable
Practical Example
A cooperative society was sanctioned a Rs. 50 lakh loan with quarterly interest payments. The AG's Loan Section notices that the June quarter interest of Rs. 1.25 lakh has not been received by July 15. The accountant immediately reports this to the Registrar of Cooperative Societies (the sanctioning authority), who then issues a notice to the society demanding payment with 2% penal interest on the overdue amount as prescribed by the rules.
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 penal interest and when does it apply?▼
Does the AG enforce the penal interest or just report the default?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.