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:-
- 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
notification in the Gazette, appoint.
- 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-
c) “prescribed” means prescribed by rules made under the Act;
d) “State” means the State of Kerala.
- Ceiling on Government Guarantees.—The total outstanding Government
guarantees as on the first day of April of any year shall not exceed rupees fourteen
- 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.
- 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
- Guarantee Redemption Fund.—(1) The Government shall, by notification in
the Gazette, constitute a fund called the Guarantee Redemption Fund.
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