The KARNATAKA CEILING ON GOVERNMENT GUARANTEES ACT, 1999.

 1
THE KARNATAKA CEILING ON GOVERNMENT GUARANTEES ACT, 1999 
ARRANGEMENT OF SECTIONS 
Sections: 
 1. Short title and commencementShort title and commencement  
 2. Definitions. 
 3. Ceiling on Government guarantees. 
 4. Prohibition. 
 5. Guarantee Commission. 
 6. Performance Guarantee. 
* * * * 
STATEMENT OF OBJECTS AND REASONS 
I 
Act  11 of 1999.-   To give effect to the proposals made in the Budget Speech and 
also for implementing the recommendations of the Technical Committee of State 
Finance Secretaries to fix limit on Government Guarantees, it is considered necessary to 
bring out legislation to provide for limits on Government Guarantees issued on behalf of 
the Government Departments, Public Sector undertakings, Local Authorities, Statutory 
Boards and Corporations and Co-operative Institutions etc., for promoting fiscal 
discipline in the State. 
Hence the Bill. 
(Obtained from L.A. Bill No.13 of 1999 - File No. É⪠ÀâX µÖ E , 13  µÖÉâ}â 99 ) 
 
II 
 
 Act No. 15 of 2002.- It is considered necessary to amend the Karnataka Ceiling on 
Government Guarantees Act, 1999 (Karnataka Act 11 of 1999) to provide that no 
guarantee commission shall be charged in respect of guarantees extended during the 
period from 1.4.2001 to 31.3.2002 for loans granted by the Karnataka State Co-
operative Apex Bank Limited and Karnataka State Co-operative Agriculture and Rural 
Land Development Bank Limited for the purpose of Agriculture and in turn to require 
them to reduce one percent interest in their lending rate in respect of the agricultural 
loans disbursed by them during the said period. 
 
 Hence the Bill. 
 
 (L.A. Bill No. 4 fo 2002) 
 
 
 
 
 
 
 
 
 2
KARNATAKA ACT NO. 11 OF 1999 
(First Published in the Karnataka Extraordinary Gazette on the Twenty ninth day of April, 
1999) 
THE KARNATAKA CEILING ON GOVERNMENT GUARANTEES ACT, 1999. 
(Received the assent of the Governor on the Twenty Sixth day of April, 1999) 
(As Amended by Act 15 of 2002) 
 An Act to provide for ceiling on Government Guarantees and other matters 
connected therewith. 
 W HEREAS it is expedient to provide for ceiling on the Government guarantees issued 
on behalf of the Government Departments, Public Sector Undertakings, Local 
Authorities, Statutory Boards and Corporations and Co-operative Institutions and for 
promoting fiscal discipline of the State; 
 B E it enacted by the Karnataka State Legislature in the fiftieth year of the Republic of 
India, as follows:-  
 1. Short title and commencement.-  (1) This Act may be called the Karnataka 
Ceiling on Government Guarantees Act, 1999. 
 (2) It shall come into force on such  1[date]1 as the Government may by notification 
appoint. 
  1. The Act has come into force on 29.4.1999 by notificat ion. Text of the notification is at the end of the Act. 
 2. Definitions. -  In this Act, unless the contest, otherwise, requires,- 
 (1) "Government" means the State Government; 
 (2) "Government Guarantee"  includes the guarantee given by the State Government 
on behalf of Departmental Undertakings, Public Sector Undertakings, Local Authorities, 
Statutory Boards and Corporations and Co-operative Institutions; 
 (3) "Performance Guarantee"  includes the documents such as letters of comfort, 
power purchase agreement, State support agreement, concession agreement for 
infrastructure project and other agreements guaranteed in certain performance on behalf 
of Government, Local Authorities, Statutory Boards and Corporations and Co-operative 
Institutions as well as Public Sector Undertakings. 
 3. Ceiling on Government guarantees. - The total outstanding Government 
guarantees as on the first day of April of any year shall not exceed eighty percent of the 
State's revenue receipts of the second preceding year as in the books of the Accountant 
General of Karnataka: 
 Provided  that the ceiling on the Government guarantee shall not apply for any 
additional borrowing for implementation of the Upper Krishna Project, for the purpose of 
utilising the water resources as per Bachawath Award. 
 4. Prohibition. -  Notwithstanding anything contained in any other Act,- 
 (1) no Government guarantee shall be given in respect of a loan of any private 
individual, institution or company; 
 (2) no Government guarantee shall be extended to the Co-operation sector unless 
the share capital contribution from the non-Go vernment sources is not less than the ten 
percent of the total equity proposed. 
 5. Guarantee Commission.-  (1)  The Government shall charge a minimum of 
one percent as guarantee commission which shall not be waived under any 
circumstance, 
 3
1[Provided that no Guarantee Commission shall be charged in respect of the 
Government Guarantees extended during the period from the first day of April, 2001 to 
the thirty-first day of March, 2002 for the loans granted by the Karnataka State Co-
operative Apex Bank Limited and the Karnataka State Co-operative Agriculture and 
Rural Land Development Bank Limited for the purpose of agriculture: 
Provided further that the Karnataka State Co-operative Apex Bank Limited and 
the Karnataka State Co-operative Agriculture and Rural Development Bank Limited shall 
reduce one percent interest in their lending rates for all agricultural  loans which have 
been disbursed by them during the period from the first day of April, 2001 to the thirty-
first day of March, 2002]1 
 1. Inserted by Act 15 of 2002 w.e.f. 1.4.2001  
  (2) Depending on the default risk of the project the Government may, by 
notification, specify commission at an enchanced rate. 
 Explanation.-  For the purpose of this section 'default risk' means the probability of 
default by the borrower on whose behalf the Government Guarantee is given, depending 
on the amount borrowed, the type of industry and the economic situations. 
 6. Performance Guarantee. -  (1)  In the interest of development of infrastructure 
project the Government may continue to give performance guarantee to all such sectors. 
 (2) The Government shall place before both the Houses of the State Legislature a 
comprehensive report on the liabilities ( in rupees) that the State may incur in future, if 
the State fails to meet the contractual obligation stated in the performance guarantee. 
 (3) The report referred to in sub-section (2) shall be placed within six months of the 
date of giving performance guarantee. 
* * * * 
%ºÉâ³kâ}ê 
ÏêªgâÔâ³pâ°, ¬}Öªdâ: 5}ê© m³}Ò 1999 (ÉâªfêX: AE 3 ApÒUÈÒ 99) 
 dâ}ÖËrdâ ÉâdÖËî fÖyâîgâÔâ Àê°©¶}â Æ°» %º¾Ìâ°Àâ °, 1999 (1999pâ dâ}ÖËrdâ %º¾Ìâ°Àâ° ÉâªfêX 11)pâ 
~âZdâpâx 1pâ I~â ~âZdâpâx (2) pâ¶[ ~âZ{âyâKÀÖ{â %ºdÖpâÀâ }â°Q kâÈÖΰû dâ}ÖËrdâ ÉâdÖËpâ{â 29.04.1999 ¬}Öªdâ{âª{â° 
Éâ{âî %º¾Ìâ°Àâ°{â UÈÖ[ I~ⱪ|âgâÔâ° uÖîÌâ°¶[ ±pâyâdâ"{â°M Uª{â° o Àâ°³·dâ gê³yâ°K~âÚÉâ°yâK{ê. 
 dâ}ÖËrdâ pÖmX~Ö·pâ A{ꩵÖ}â°ÉÖpâ Àâ°yâ°K %Àâpâ ÝêÉâî}â¶[, 
 
U}Ò.UÉÒ. }ÖgâpÖm}Ò 
Ƶê©ÍÖºdÖî, 
A¼Ëdâ EÈÖfê, ÚYÊUª d곩µâ 
 
   
 4
THE KARNATAKA CEILING ON GOVERN MENT GUARANTEES ACT, 1999 has been 
amended by the following Acts, namely.- 
 
Amendments (Chronological) 
 
Sl. 
No. 
Act No. 
and Year 
Sections 
Amended 
Remarks 
1 11 of 1999 - The Act has come into force from 29.4.1999 vide 
notification No. FD 3 RLG 99 dated 5.6.1999. 
2. 15 of 2002 5(1) w.e.f.1.4.2001 
 
Amendments (Section-wise) 
 
Sections No and Year of the Act Remarks 
5(1) 15 of 2002 w.e.f.1.4.2001 
 
(The above translation of the dâ}ÖËrdâ ÉâdÖËî fÖyâîgâÔâ Àê°©¶}â Æ°» %º¾Ìâ°Àâ°, 1999 ( 1999pâ dâ}ÖËrdâ 
%º¾Ìâ°Àâ° ÉâªfêX 11)   was published in the official Gazette (Extraordinary) Part IV-2B dated 
17th day of June 1999 as No. 660 under clause (3) of Article 348 of the Constitution of 
India.) 
* * * * 

‹ Prev All Karnataka acts Next ›