Rule 249 of The General Financial Rules 2017 Loan Sanctions Terms and Repayment
Original Rule Text
Visual Summary
Must comply with Delegation of Financial Powers Rules.
Clear specification of repayment and interest terms is mandatory.
Requires prior Ministry of Finance concurrence for special reasons.
Executive Summary
Rule 249 of the General Financial Rules, 2017, mandates that all loan sanctions must adhere to the Delegation of Financial Powers Rules. It requires clear specification of repayment and interest terms. Any subsequent modifications to these terms are only permissible under very special circumstances and necessitate prior concurrence from the Ministry of Finance, ensuring strict financial discipline and accountability in government lending.
In-Depth Analysis of the Rule
Rule 249 outlines the fundamental requirements for sanctioning and managing government loans, emphasizing adherence to established financial protocols and strict control over any changes to loan terms. It serves as a cornerstone for maintaining transparency and accountability in financial transactions involving public funds.
Breakdown of the Rule:
- Rule 249 (1) – Sanctioning Authority and Terms: All loan sanctions must comply with the Delegation of Financial Powers Rules. This ensures that only authorized bodies can approve loans and that the process follows established financial protocols. Crucially, the sanction order must explicitly detail the terms and conditions of repayment and the applicable interest rates. This clarity is vital for both the borrower and the government to understand their obligations.
- Rule 249 (2) – Adherence and Modifications: Borrowers are expected to strictly adhere to the agreed-upon loan terms. Any deviation or modification to these terms is not taken lightly. Such changes can only be made for “very special reasons” and require the prior concurrence of the Ministry of Finance. This provision acts as a safeguard against arbitrary changes and ensures that significant financial adjustments are subject to high-level scrutiny and approval.
Practical Example:
A government department sanctions a loan to a public sector undertaking for an infrastructure project. Rule 249(1) dictates that this sanction must be in line with the Delegation of Financial Powers Rules, clearly stating the interest rate, repayment schedule, and any penalties for default. Two years into the project, the undertaking faces unforeseen challenges and requests a modification to the repayment schedule. According to Rule 249(2), this modification can only be granted if there are “very special reasons” and, critically, with the prior concurrence of the Ministry of Finance, ensuring that such changes are not made lightly and are financially justified.
Related Provisions
Understanding Rule 249 is enhanced by examining other related provisions within the General Financial Rules, 2017:
- Rule 247 of The General Financial Rules 2017 Powers and Procedure for Sanction of Loans: Details the delegated powers and procedures for sanctioning loans.
- Rule 250 of The General Financial Rules 2017 General Conditions for Regulating All Loans: Outlines the overarching conditions that govern all loans.
- Rule 251 of The General Financial Rules 2017 Interest on Loans: Provides specific guidance on the calculation and application of interest on loans.
Learning Aids
Mnemonics:
- Loan Sanctions Terms Modifications: Legally Specified Terms Must Meet Ministry Finance.
Process Flowchart:
Multiple Choice Questions (MCQs)
1. What must all loan sanctions under Rule 249 of the General Financial Rules, 2017, be subject to?
- A) Approval from the State Government
- B) Delegation of Financial Powers Rules
- C) Public Accounts Committee review
- D) Commercial bank guarantees
Show Answer
Correct Answer: B) Delegation of Financial Powers Rules
2. According to Rule 249 (1) of the General Financial Rules, 2017, what must loan sanctions specify?
- A) The borrower’s credit score
- B) Terms and conditions of repayment and interest
- C) The purpose of the loan only
- D) The political affiliation of the borrower
Show Answer
Correct Answer: B) Terms and conditions of repayment and interest
3. Under Rule 249 (2) of the General Financial Rules, 2017, when can modifications to loan terms be made?
- A) At the borrower’s discretion
- B) Only for very special reasons with prior Ministry of Finance concurrence
- C) Annually during budget review
- D) With approval from the administrative department only
Show Answer
Correct Answer: B) Only for very special reasons with prior Ministry of Finance concurrence
4. What is the primary responsibility of borrowers regarding loan terms under Rule 249 (2) of the General Financial Rules, 2017?
- A) To negotiate new terms regularly
- B) To adhere strictly to the settled terms
- C) To seek external funding for repayment
- D) To report to the Audit Officer monthly
Show Answer
Correct Answer: B) To adhere strictly to the settled terms
5. If a modification to loan terms is proposed under Rule 249 (2) of the General Financial Rules, 2017, which authority’s prior concurrence is essential?
- A) Comptroller and Auditor General
- B) Reserve Bank of India
- C) Ministry of Finance
- D) Parliament
Show Answer
Correct Answer: C) Ministry of Finance
Frequently Asked Questions
What is the main purpose of Rule 249 of the General Financial Rules, 2017?
Rule 249 ensures that all government loan sanctions are governed by strict financial propriety, requiring adherence to delegated powers and clear specification of all terms and conditions, including repayment and interest.
Can the terms of a loan sanctioned under Rule 249 of the General Financial Rules, 2017, be changed?
Yes, but only for “very special reasons” and with the mandatory prior concurrence of the Ministry of Finance, as stipulated in Rule 249 (2).
What details must be included in a loan sanction order as per Rule 249 (1) of the General Financial Rules, 2017?
The sanction order must explicitly specify all terms and conditions related to the loan, including the terms of its repayment and the payment of interest.
Key Takeaways
- Loan sanctions must strictly follow the Delegation of Financial Powers Rules.
- All loan terms, including repayment and interest, must be clearly specified in the sanction.
- Modifications to loan terms require “very special reasons” and prior approval from the Ministry of Finance.
- Borrowers are obligated to adhere strictly to the agreed-upon loan conditions.
Conclusion
Rule 249 of the General Financial Rules, 2017, is a critical provision that underpins the integrity of government lending. By mandating strict adherence to financial rules, clear articulation of loan terms, and rigorous approval for any modifications, it ensures that public funds are managed with utmost responsibility, transparency, and accountability, thereby safeguarding financial stability and promoting prudent fiscal practices.