Rule 254 of The General Financial Rules 2017 Undertaking from Wholly Owned Government Companies

Rule 254 of The General Financial Rules 2017 Undertaking from Wholly Owned Government Companies

Original Rule Text

Rule 254 Undertaking to be obtained from wholly – owned Government Companies.In the case of loans to wholly-owned Government Companies, a written undertaking to the effect that the fixed assets of the company shall not be hypothecated without prior approval of the Government shall be obtained in Form GFR 32. No stamp duty need be paid on these written undertakings.

Visual Summary

Loan Context

Applies to loans given to wholly-owned Government Companies.

Mandatory Undertaking

A written undertaking in Form GFR 32 is required.

Asset Protection

Fixed assets cannot be hypothecated without prior Government approval.

Executive Summary

Rule 254 of the General Financial Rules, 2017, mandates that when loans are provided to wholly-owned Government Companies, a written undertaking must be secured. This undertaking specifically prohibits the company from hypothecating its fixed assets without the prior approval of the Government. Notably, no stamp duty is required for these undertakings, simplifying the process while maintaining crucial financial oversight.

In-Depth Analysis of the Rule

Introduction: Rule 254 establishes a critical safeguard in the financial management of government-owned entities. It ensures that public funds lent to these companies are protected by restricting their ability to encumber core assets without explicit government consent.

Breakdown of the Rule: