Financial Daily from THE HINDU group of publications
Tuesday, Jul 16, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Economy


Bengal Govt has no proper record of guarantees: CAG

Our Bureau

KOLKATA, July 15

EVEN as the amount of guarantees given by the West Bengal Government on loans raised by State bodies increased from Rs 4,415.56 crore in 1997 to Rs 9,676.52 crore in 2001, it was found that the State Finance Department had not systematically maintained any record of these guarantees that constituted the contingent liability of the Government.

The recent report of the CAG, which uncovered some skeletons in the State Government's cupboard, has revealed that since most of the units for whom the guarantees were provided were perpetually loss-making, the guarantees had a high risk of turning into actual liability.

The Finance and four other departments - Cottage and Small Scale, Power, Transport and Commerce and Industries - provided guarantee for Rs 7,401.54 crore till March end 2001.

The CAG audit found that neither any record of guarantees were available nor did the Government collect any guarantee fee. Information/ details of guarantee were being collected by the Finance Department from loanee institutions through administrative departments and consolidated for incorporation in the Finance Accounts each year,'' the report said.

Scrutiny revealed that the guarantees were being given as a matter of course without fulfilling the conditions of guarantees like judging the creditworthiness of the loanee institution or utility of the guaranteed amount towards public interest.

In the departments test-checked, guarantees for Rs 533.67 crore were given against loans obtained by six loss-making companies. Referring to the un-collected guarantee fees, the CAG report noted that in terms of a Government order of June 1974, a loanee institution has to pay guarantee fee at the rate of half per cent per annum on the sums guaranteed. As of March 2001, an accumulated guarantee commission of Rs 131.16 crore was outstanding and no effective steps were taken by the administrative departments for realisation of this amount.

The CAG felt that the State Government needed to frame proper guidelines for approving guarantees against loans to be raised by various institutions. Further, there was need to put in place, suitable control to ensure that the discharge of guarantees is monitored by the Finance Department.

Send this article to Friends by E-Mail

Stories in this Section
AP sets up fast-track courts


Bengal Govt has no proper record of guarantees: CAG
Business `getting back its confidence'
CII chief on UK mission to restore confidence
Mobile clinics move in to fill disaster management vacuum
Guidelines released to help surgeons
Bengal Govt woos pvt players in health sector
LSHS, furnace oil prices slashed
Power projects may spill over into 11th Plan
Eastern region restores power export to South
DPC lenders meet deadlocked again
Rationalise power tariff, says CII
IDBI Bank unveils products for SMEs
IEA urges coal reforms alongside power sector
Agro-based industrial units scheme
TN jeweller installs carat meter
Real estate biz picking up in Bangalore
Paper prices revision on cards
Handloom tech conference at Kannur
Rs 27.5-cr Dutch funds for AP biotech scheme
CII (South) plans core group on film industry
IFCI may be denied access to EPF funds — ICICI also to be struck off PFI list
Kerala: Deputations to district planning panels
Cotton yarn exporters eye Far East
Lanka expects tourist flow from India to double
Wagamon's beauty


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line