General Financial Rules (GFR) 2017 MCQ GOVERNMENT GUARANTEES

GFR 2017 MCQ GOVERNMENT GUARANTEES

The Article of the Constitution of India that provide power of the Union Government to give guarantees is
(a) 292 (b) 293
(c) 289 (d) 290
Answer
Answer: A
Powers to grant Government of India Guarantee, including those on external borrowings, vests with the
(a) Budget Division, Department of Economic Affairs
(b) Budget Division, Department of Expenditure
(c) Plan Division, Department of Economic Affairs
(d) Plan Division, Department of Expenditure
Answer
Answer: A
The Administrative Ministry/Department or the credit Divisions of Department of Economic Affairs shall examine the proposal for guarantee in the same manner as a proposal for loan in consultation with
(a) CGA (b) the Financial Adviser
(c) Ministry of Finance (d) CAG
Answer
Answer: B
No guarantees shall be given without the approval of
(a) Budget Division, DEA (b) Credit Division, DEA
(c) Parliament (d) Finance Minister
Answer
Answer: A
With a view to enable the Ministry of Finance to examine cases of Government of guarantees and extension thereto, all Ministries or Departments should furnish to that Ministry, data of certain operational Parameters of the Public Sector Undertaking or Entity as given in Form
(a) GFR 24 (b) GFR 25
(c) GFR 26 (d) GFR 27
Answer
Answer: C
Where BIFR targets have been assigned or Cabinet directions issued to the Company, the actual vis-à-vis targets should be indicated for the preceding
(a) two years (b) three years
(c) four years (d) five years
Answer
Answer: B
Pick the incorrect one
(a) In case the accounts of the Central Public Sector Undertaking or Entity have been audited by the CAG, the effect of the comments of the CAG on the Central Public Sector Undertaking’s profitability should be brought out in GFR 26.
(b) Guarantees shall normally be restricted to the repayment of principal and normal interest component of the loan. Other risks shall not form par t of the guarantee
(c) Government guarantees will be extended to only central public sector companies/ agencies and shall not be provided to the private sector.
(d) Government of India guarantee may be given in cases of grants. However, if the donor insists on ensuring performance, the same may be listed as a negotiating condition for getting the grant.
Answer
Answer: D
State whether true or false
Guarantees may not be proposed in respect of Central Public Sector Enterprises whose strong financial credentials and high credit rating would indicate inherent ability to directly raise the required resources without the support of government guarantee.
(a) True (b) False
Answer
Answer: A
All risks other than principal amount and interest, including the exchange rate risk be
(a) covered by Government guarantee (b) borne by borrower
(c) borne by lender
Prepared by Deepak Kumar Rahi, AAO/Local Audit Department, Patna
(d) shared between the borrower and lender as per terms of the loan agreement.
Answer
Answer: D
The rates of fee on guarantees would be as notified by the
(a) Budget Division, Department of Economic Affairs, Ministry of Finance
(b) Budget Division, Department of Expenditure, Ministry of Finance
(c) Credit Division, Department of Economic Affairs, Ministry of Finance
(d) Credit Division, Department of Expenditure, Ministry of Finance
Answer
Answer: A
State whether true or false
The fees on guarantee are to be levied in respect of fund based borrowings or credits and shall not be levied on no-fund based borrowings or credits (viz. letters of credit, Bank guarantees etc.).
(a) True (b) False
Answer
Answer: B
Pick the incorrect one
(a) The guarantee fee should be levied soon after the guarantee is given and thereafter on first April every year.
(b) The rate of guarantee fee is to be applied on the amount outstanding at the beginning of the guarantee year.
(c) Where the guarantee fee is not paid on the due date, fee should be charged at double the normal rates for the period of default.
(d) The Government may guarantee no more than 80% of the project loan, depending on the conditions imposed by the lender.
Answer
Answer: A
Once the guarantee is approved by Ministry of Finance, the guarantees will be executed and monitored by the
(a) Ministry of Finance (b) Administrative Ministries concerned
(c) Lender/Banker (d) Project Implementing Agency
Answer
Answer: B
Administrative Ministries concerned are required to report the status of guarantees to Ministry of finance till they are invoked or are obliterated on
(a) Monthly basis (b) Quarterly basis
(c) Six monthly basis (d) Annual basis
Answer
Answer: D
Pick the incorrect one
(a) Guarantee proposals approved by the Budget Division shall have to be executed in the same financial year.
(b) If the guarantee/loan agreement is not signed in the same financial year as that of the approval of the guarantee proposal, the guarantee proposal shall have to be submitted again.
(c) The guarantee shall hold only for the specific purpose agreed to by the Budget Division.
(d) Guarantee given by Government of India shall be non-transferrable and would cease to exist in case the ownership of the entity is transferred from Government of India, unless the Guarantee is re-confirmed by the Parliament.
Answer
Answer: D
The Financial Advisers in Ministry/Department will perform the responsibility of maintenance of records and reporting including for the Finance Accounts and the IGAS, through the office of
(a) Controller/Chief Controller of Accounts (b) Controller General of Accounts
(c) Principal Accounts Officer (d) Controller Aid Accounts & Audit
Answer
Answer: A
All Ministries or Departments shall ensure that all guarantees are reviewed every year. A copy of the review report including on timely and correct payment of guarantee fees, shall be forwarded by the finance Advisor to the Budget Division by
(a) 31st March every year for the previous financial year.
(b) 30th April every year for the previous financial year.
(c) 30th September every year for the previous financial year
(d) 31st December every year for the previous financial year
Prepared by Deepak Kumar Rahi, AAO/Local Audit Department, Patna
Answer
Answer: B
Register of guarantees is maintained in Form
(a) GFR 19 (b) GFR 22
(c) GFR 25 (d) GFR 35
.
Answer
Answer: C
Data as contained Register of Guarantees duly updated every year to be sent to the Budget Division in the Ministry of Finance, Department of Economic Affairs by
(a) 10th of April of following year (b) 15th of April of following year
(c) 20th of April of following year (b) 30th of April of following year
Answer
Answer: A
Pick the incorrect one
(a) In respect of guarantees issued by the Ministry of Finance for external loans, the respective credit divisions, DEA shall conduct an annual review in consultation with the Financial
Adviser (DEA).
(b) For this purpose the Financial Adviser (DEA) shall ensure the maintenance of the required registers, as well as ensure that the annual reviews are carried out by the concerned credit divisions, and report forwarded to the Budget Division in Form GFR 25.
(c) In cases, where the guarantees on external loans are issued by the concerned administrative Ministry, that Ministry would be responsible for conducting the review.
(d) For the purpose of record keeping, guarantees shall be classified into five categories.
Answer
Answer: D
Government is required to publish a disclosure statement on guarantees given by Government, at the time of presenting the annual financial statement and demands for grants in terms of provision of
(a) Rule 6 of the FRBM Rules, 2004
(b) Section 6 of Government Securities Act
(c) Article 292 of the Constitution (d) All of the above
Answer
Answer: A
The disclosure statement on guarantees is to be compiled by the Administrative Ministries/ Departments and submitted to Controller General of Accounts for onward submission to
(a) Credit Division (b) Budget Division
(c) Annual Accounts Division (d) Finance Minister
Answer
Answer: B
A Guarantee Redemption Fund (GRF) for redemption of guarantees given to CPSEs, Financial Institutions, etc., by the Central Government whenever such guarantees are invoked has been established in the
(a) Consolidated Fund (b) Contingency Fund
(c) Public Account (d) Persona Deposit Account
Answer
Answer: C
The funding to the Guarantee Redemption Fund is to be done through budgetary appropriations, as considered appropriate, under the head ‘Transfer to Guarantee Redemption Fund’ through the Demands for Grants of the
(a) Department of Economic Affairs (b) Department of Expenditure
(c) Department of External Aid (d) Department of Revenue
Answer
Answer: A
Pick the incorrect one
(a) The Administrative Ministries/Departments should inform any case of impending/likely invocation, well in advance, to the Budget Division, along with the proposed corrective measures.
(b) In the event of invocation of a guarantee, the obligation may be discharged by sanctioning loan to the borrowing entity equal to the amount of guarantee outstanding with the approval of Parliament.
(c) Any payment on this account will finally be charged to the Guarantee Redemption Fund maintained in the Public Accounts.
(d) Indian Government Accounting Standard- 1(IGAS-1) relates to Government Guarantees.

Answer

Answer: B

General financial Rules (GFR) 2017 MCQ GOVERNMENT GUARANTEES

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