The Kerala Ceiling on Government Guarantees Act, 2003

[Translation in English of   “2003-ലലെ കകേരള ഗവൺലമെനന്റ് ഗഗാരണണ്ടികേളളുലടെ പരമെഗാവധണ്ടി 
പരണ്ടിധണ്ടി ആകന്റ്” published under the authority of Governor.]
ACT 30 OF 2003
THE KERALA CEILING ON GOVERNMENT GUARANTEES ACT, 2003 *
An Act to provide for ceiling on Government guarantees and other matters connected
therewith or incidental thereto.
Preamble.—WHEREAS it is expedient to provide for ceiling on Government guarantees
issued on behalf of the Government departments, public sector undertakings, local authorities,
statutory boards, corporations and co-operative institutions and for promoting fiscal discipline
of the State;
BE it enacted in the Fifty-fourth Year of the Republic of India as follows:—
1.  Short title and commencement .—(1) This Act may be called the Kerala Ceiling on
Government Guarantees Act, 2003.
(2) It shall come into force on such date as the Government may, by 1notification in
the Gazette, appoint.
2. Definitions.—In this Act, unless the context otherwise requires,—
(a) “Government” means the Government of Kerala;
(b) “Government guarantee” includes the guarantee given by the State Government on
behalf of the Government departments, public sector undertakings, local authorities, statutory
boards, corporations and co-operative institutions;
(c) “prescribed” means prescribed by rules made under the Act;
(d) “State” means the State of Kerala.
2[3. Ceiling on Government Guarantees.—The total outstanding Government Guarantees as
on the first day of April of any year shall be 100% of the total revenue receipts as per the
annual financial statement of the State in the preceding year at 10% of the Gross State
Domestic product (GSDP), whichever is lower.]
* Received the assent of the Governor  on the  13th day of  September, 2003  and published in the Kerala Extraordinary Gazette 
No. 1739 dated 17th September, 2003.
1  Vide   S.R.O. No. 1132/2003 dated 4-12-2003 (w.e.f. 05-12-2003).
2 Substituted by Act 9 of 2022 ( w.e.f. 01-04-2022).
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4. Prohibition.—Notwithstanding anything contained in any other law for the time
being in force, no Government guarantee shall be given in respect of a loan of any
private individual, Institution or Company.
5. Guarantee commission.—(1) The Government shall charge a minimum of 0.75 per
cent per annum as guarantee commission, which shall not be waived under any
circumstances.
(2) Depending on the default risk of any project, the Government may, by
notification in the Gazette, specify commission at an enhanced 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.
(3) The guarantee given shall not be extended on the expiry of the guarantee
period unless the borrower had paid in full the guarantee commission due to the
government.
6. Guarantee Redemption Fund .—(1) The Government shall, by notification in the
Gazette, constitute a fund called the Guarantee Redemption Fund.
(2) The Guarantee commission charged under section 5 shall form the corpus of
the Guarantee Redemption Fund and it shall be remitted in the Public Accounts of the
State.
(3) The administration of Guarantee Redemption Fund shall be in such manner
as may be prescribed.
7. Power of Government to make rules .—(1) The Government may, by notification
in the Gazette, make rules for the purpose of carrying into effect the provisions of this
Act.
(2) Every rule made under this Act shall be laid, as soon as may be after it is
made, before the Legislative Assembly while it is in session for a total period of
fourteen days, which may be comprised in one session or in two successive sessions, and
if, before the expiry of the session in which it is so laid or the session immediately
following, the Legislative Assembly makes any modification in the rule, or decides that
the rule should not be made, the rule shall thereafter have effect only in such modified
form or be of no effect, as the case my be; so however, that any such modification or
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annulment shall be without prejudice to the validity of anything previously done under
that rule.

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