Para 3.13.18 — MSO

3.13.18 Under Articles 292 and 293 of the Constitution, the Union and the States are empowered to give guarantees in respect of loans raised by others within such limits as may be fixed from time to time by an Act of Parliament or of the State Legislature, as the case may be. Such guarantees constitute contingent liabilities of Government. It is an essential duty of Audit to maintain a close watch over guarantees given by Governments to ensure that:

(i) the ceilings prescribed by the Legislature are not exceeded;

(ii) any general or special orders of the Governments concerned prescribing the levy of a commission for giving guarantees are duly observed; and

(iii) a sound system in place to maintain proper records of the guarantees given along with their terms and conditions.

It is also necessary that the total amount of such guarantees as well as the amount involved in guarantees, if any, invoked during the year are mentioned in the Audit Report on the accounts of the Union or the State Government concerned, as the case may be.