Rule 248 of The General Financial Rules 2017 Sanctions of Loans
Original Rule Text
Visual Summary
All loan sanctions must include a certificate of compliance.
Interest rates and repayment periods require Ministry of Finance approval.
Applies to Central Government departments and UT Administrators.
Executive Summary
Rule 248 of The General Financial Rules, 2017, mandates that all sanctions for loans issued by Central Government departments or Union Territory Administrators must include a certificate. This certificate serves to confirm that the loan’s terms, specifically the interest rate and repayment period, comply with the rules and principles prescribed by the Ministry of Finance and have received their explicit approval. This ensures financial discipline and adherence to central guidelines in government lending activities.
In-Depth Analysis of the Rule
Introduction: Rule 248 is a critical provision within the General Financial Rules, 2017, designed to ensure stringent financial oversight and compliance in the sanctioning of government loans. It places a specific obligation on sanctioning authorities to certify adherence to central financial guidelines.
Breakdown of the Rule:
- Applicability: The rule applies to all sanctions of loans issued by a Department of the Central Government or an Administrator of a Union Territory. This covers a broad spectrum of government lending.
- Mandatory Certificate: Every loan sanction must be accompanied by a certificate. This certificate is not merely a formality but a crucial document for accountability.
- Content of Certificate: The certificate must explicitly state that the loan sanction aligns with the rules or principles prescribed by the Ministry of Finance. This ensures consistency and adherence to overarching financial policies.
- Specific Approval Requirement: Crucially, the certificate must also confirm that both the rate of interest on the loan and its period of repayment have been fixed with the explicit approval of the Ministry of Finance. This highlights the Ministry’s central role in determining key financial parameters of government loans.
Practical Example: Imagine the Ministry of Health and Family Welfare decides to sanction a loan to a State Government for a new hospital project. According to Rule 248 of the General Financial Rules, 2017, before the loan sanction order is officially issued, the Ministry must ensure that a certificate is prepared and included. This certificate would attest that the proposed interest rate for the loan and its repayment schedule have been determined in strict accordance with the financial rules and principles laid down by the Ministry of Finance, and that the Ministry of Finance has formally approved these specific terms.
Related Provisions
Understanding Rule 248 is enhanced by considering other related provisions concerning government loans:
- Rule 247 (1) of The General Financial Rules 2017 Powers and Procedure for Sanction of Loans: This rule outlines the general powers and procedures for sanctioning loans, providing context for the specific certification requirement of Rule 248.
- Rule 247 (2) of The General Financial Rules 2017 Nodal Division in Ministry of Finance: This provision identifies the Budget Division, Department of Economic Affairs, Ministry of Finance, as the nodal division for finalizing loan terms and conditions, directly supporting the approval requirement in Rule 248.
Learning Aids
Mnemonics
- Certify MoF‘s Rates & Repayments for Loans. (Certificate, MoF Approval, Rates, Repayment, Loans)
Process Flowchart
Multiple Choice Questions
1. What is the primary requirement for loan sanctions under Rule 248 of the General Financial Rules, 2017?
- A) A detailed project report
- B) A certificate of compliance with Ministry of Finance rules
- C) Approval from the Comptroller and Auditor General
- D) A public tender process
Show Answer
Correct Answer: B) A certificate of compliance with Ministry of Finance rules
2. Which authority’s approval is specifically required for interest rates and repayment periods in loan sanctions, according to Rule 248 of the General Financial Rules, 2017?
- A) The President of India
- B) The Parliament
- C) The Ministry of Finance
- D) The Reserve Bank of India
Show Answer
Correct Answer: C) The Ministry of Finance
3. Rule 248 of the General Financial Rules, 2017 applies to loan sanctions issued by which entities?
- A) Only Central Government Departments
- B) Only Administrators of Union Territories
- C) Both Central Government Departments and Administrators of Union Territories
- D) State Governments and Local Bodies
Show Answer
Correct Answer: C) Both Central Government Departments and Administrators of Union Territories
4. What must a certificate accompanying a loan sanction under Rule 248 of the General Financial Rules, 2017 confirm regarding the rules?
- A) Compliance with international financial standards
- B) Adherence to the rules or principles prescribed by the Ministry of Finance
- C) Agreement with the State Government’s financial policies
- D) Approval from the NITI Aayog
Show Answer
Correct Answer: B) Adherence to the rules or principles prescribed by the Ministry of Finance
5. If a Central Government Department sanctions a loan, what must be certified regarding the interest rate as per Rule 248 of the General Financial Rules, 2017?
- A) That it is the lowest possible rate
- B) That it has been fixed with the approval of the Ministry of Finance
- C) That it matches the prevailing market rate
- D) That it is negotiable with the borrower
Show Answer
Correct Answer: B) That it has been fixed with the approval of the Ministry of Finance
Frequently Asked Questions
What is the main purpose of Rule 248 of the General Financial Rules, 2017?
The main purpose is to ensure financial discipline and accountability in government loan sanctions by requiring a certificate of compliance with Ministry of Finance rules, particularly for interest rates and repayment periods.
Does Rule 248 of the General Financial Rules, 2017 apply to all types of government financial transactions?
No, Rule 248 specifically applies to “sanctions of loans” issued by Central Government Departments or Administrators of Union Territories, focusing on the terms of such loans.
What specific details of a loan sanction require Ministry of Finance approval under Rule 248 of the General Financial Rules, 2017?
Under Rule 248, the rate of interest on the loan and the period of repayment thereof must be fixed with the explicit approval of the Ministry of Finance.
Key Takeaways
- Mandatory Certificate: All government loan sanctions must include a certificate confirming adherence to financial rules.
- MoF Approval for Key Terms: The Ministry of Finance’s approval is essential for setting the interest rate and repayment period of any sanctioned loan.
- Broad Applicability: This rule applies to loan sanctions by both Central Government Departments and Union Territory Administrators.
- Ensuring Financial Propriety: The rule reinforces financial discipline and accountability in government lending operations.
Conclusion
Rule 248 of The General Financial Rules, 2017, serves as a cornerstone for maintaining financial integrity and consistency in government loan disbursements. By mandating a certificate of compliance and requiring explicit Ministry of Finance approval for critical loan terms, it ensures that public funds are managed judiciously and in accordance with established financial principles. This rule is vital for preventing arbitrary decisions and upholding accountability in government lending practices.