Вы находитесь на странице: 1из 41

PDP Australia Pty.

Ltd

Draft for Discussion and Consultation with Stakeholders

Draft Guidelines and Policy for Guarantees and


Counter Guarantees of the Government of Bangladesh
Prepared for
Treasury and Debt Management Wing
Finance Division, Ministry of Finance
Government of the Peoples Republic of Bangladesh

C1.2 Team1
20 February 2014
Deepening MTBF and Strengthening Financial Accountability Project,
Ministry of Finance, Finance Division,
Government of the Peoples Republic of Bangladesh,
20th Floor, 6th Building, Bangladesh Secretariat,
Dhaka-1000, Bangladesh.

1 The draft guideline has been prepared by Dr. Tarun Das, Technical Adviser (Public Debt

Management and Policy) in association with Dr. Ziaul Abedin and Mahmuda Begum, National
Technical Experts (Debt Management and Policy), DMTBF and Strengthening Financial
Accountability Project, Finance Division, Ministry of Finance.

FOREWORD

A key area of public debt management is the identification, quantification and


management of public contingent liabilities, which may pose threats to fiscal
sustainability and overall macro-economic stability and, therefore, require better
monitoring and management. Guarantees and counter guarantees constitute the major
portions of explicit contingent liabilities of the government.
The present draft entitled Draft Guidelines and Policy for Guarantees and Counter
Guarantees of the Government of Bangladesh deals with the policies, legal provisions,
objectives, procedures and guidelines for examination, approval, issue, execution,
monitoring ad evaluation of guarantees and counter guarantees of the government of
Bangladesh.
The Draft guideline has been prepared by Dr. Tarun Das, International Expert (Debt
Management and Policy) in association with Dr. Ziaul Abedin and Ms. Mahmuda
Begum, National Experts (Debt Management and Policy). Authors have also benefitted
from valuable discussions with the officers of the Treasury and Debt Management Wing
(TDMW) of the Finance Division, Ministry of Finance.
The Draft guideline is being circulated for general comments and to initiate further
consultations with multi stakeholders. We would welcome any comments from all
stakeholders for verification of facts, data and information contained in this draft and
suggestions to revise, update and improve the document.

Mr. Md. Mahiuddin Khan


Component Director (C1)

PREFACE

Efforts to streamline contingent liabilities and to manage them with due diligence and
caution started in Bangladesh after the adverse impact of the world wide financial and
economic crisis faced by some developed countries since 2008.
Policy makers in the Ministry of Finance of the government of the peoples republic of
Bangladesh now pay more attention to the hidden risks of contingent liabilities,
particularly of guarantees and counter guarantees issued by the government which
constitute major portions of explicit contingent liabilities. Treasury and Debt
Management Wing with the support of Consultants of the DMTBF Project have made an
attempt to formulate draft policy guidelines for approval and issue of guarantees/
counter guarantees after the global financial crisis and associated debt crisis
The Draft guideline is being circulated to all stakeholders for their comments and to
initiate further consultations with them. On the basis of comments the draft guideline will
be revised and put up for approval by the Finance secretary and the honorable Finance
Minister. All stakeholders are, therefore, requested to provide their comments and
suggestions for revision and improvement of the draft guideline.

Mr. Md. A R N Sakib


Additional Secretary
Treasury and Debt Management Wing
Finance Division
Ministry of finance
20 February 2014

Draft Guidelines and Policy for Guarantees and


Counter Guarantees of the Government of Bangladesh
CONTENTS
Foreword by Component Director (C1)
Preface by Additional Secretary (TDMW)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Preamble
Short Title and Commencement
Definitions
Objectives of Sovereign Guarantees/ Counter Guarantees in Bangladesh
Benefits of Sovereign Guarantees/ Counter Guarantees
General Legal Provisions Relating to Public Guarantees in Bangladesh
Classification of Guarantees/ Counter Guarantees
Conditions for Issue of Guarantees/ Counter Guarantees
Procedures for Issue and Approval of Guarantees/ Counter Guarantees
Limits on Guarantee Flows and Stocks
Guarantee Redemption Fund/ Contingent Liability Redemption Fund
Levy of Guarantee Fees/ Commissions
Monitoring and Review of Guarantees/ Counter Guarantees
Accounting and Auditing of Guarantees/ Counter Guarantees
Invocation of Guarantees/ Counter Guarantees/ Counter Guarantees
Management of Risk and Prioritization of Guarantees/ Counter Guarantees
Role of Bangladesh Bank to Monitor Financial Performance of Banks
Compliance

Annexes
1.
2.

Extracts from Constitution of Bangladesh 1972


Extracts from Contracts Act 1872
3. Format for Application for Guarantees/ Counter Guarantees
4. Format for Quarterly Report on Disclosure of Guarantees / CGs
5. Formats for Class-Wise and Sector-Wise Disclosure of Financial Statements
on guarantees and Counter Guarantees

Draft Guidelines and Policy for Guarantees and


Counter Guarantees of the Government of Bangladesh
1. Preamble
Guarantees and counter guarantees constitute major portion of explicit contingent liabilities of
the government, which are based upon legal and contractual commitment or formal
acknowledgement of a potential claim. As per Government Finance Statistics Manual 2001
(GFSM 2001)2, contingent liabilities are defined as the stock of explicit government (public
sector) guarantees plus the net present value of the obligations of social security schemes.
Contingent liabilities arise as a result of financial contracts that create a conditional financial
claim on a unit. Such a claim becomes effective if a stipulated condition arises. Collectively,
such contingencies may be important for budgetary and fiscal policies and analysis. Accordingly
the GFSM 2001 stipulates that important contingent contracts should be recorded as a
memorandum item in the budget and the financial balance sheet of the government.
Contingent contracts can represent either potential assets or liabilities. A common type of
contingent liability of a general government unit is a guarantee of payment by a third party, such
as when the general government unit guarantees the repayment of a loan by another borrower.
Such arrangements are contingent because the guarantor is required to repay the loan only if
the borrower defaults. Other examples of contingent liabilities include letters of credit, lines of
credit, indemnities against unforeseen tax liabilities arising in government contracts with other
units, and damages and other legal claims against the government in pending court cases. An
example of a contingent asset is a pending legal case in which the government has claimed
damages against another party (GFSM 2001).
2. Short Title and Commencement
These Guidelines may be called Guarantee Policy and Guidelines for the Government of
Bangladesh 2014.
These guidelines shall come into force with immediate effect.
3. Definitions
In these guidelines, unless the context otherwise requires, major concepts and terms have the
following definitions:
(1) Amortization means repayment of principal of a loan;
(2) Agency means any Agency or Department under the jurisdiction of any line Ministry or
Division of the Government of Bangladesh.
(3) Appropriation means the assignment, to meet specified expenditure, of funds
included in a primary budgetary unit of appropriation;
(4) Audit Officer means the Head of an Office of Audit;
(5) Auditor-General means the Comptroller and Auditor-General of Bangladesh;
2 Box-4.1, p.46, Government Finance Statistics Manual 2001 (GFSM 2001), pp.1-179,
International Monetary Fund (IMF), Washington D.C., 2001.
5

(6) Bangladesh Bank means the Central Bank of Bangladesh or any office or agency of
the Bangladesh Bank;
(7) Beneficiary means the Principal Debtor or the entity in respect of whose default the
guarantee is given.
(8) Budgetary Agency means a Ministry, Division, Agency or a Department of the
Government for which specific budget has been allocated under the Demand for Grants
and approved by the government;
(9) Competent Authority means, in respect of the specific power to be exercised under
these guidelines, the authority to which the power has been assigned or delegated under
delegation of powers or any other general or special orders issued by the Government of
the Peoples Republic of Bangladesh;
(10) Consolidated Fund means the Consolidated Fund of Bangladesh referred to in
Article 84(1) of the Constitution of Bangladesh;
(11) "Creditor" means the entity to which the guarantee is given.
(12) the Constitution means the Constitution of the Peoples Republic of Bangladesh;
(13) Contingency Fund means the Contingency Fund of Bangladesh, if any, established
under any Act;
(14) Contingent Liability as per the definition of GFSM 2001 means the stock of explicit
government (public sector) guarantees plus the net present value of the obligations of
social security schemes;
(15) Controlling Officer means an officer entrusted by a Department of the Government
with the responsibility of controlling the incurring of expenditure and/or the collection of
revenue. The term shall include a Head of Department and also an Administrator;
(16) Debt Services mean amortization plus payment of interest charges;
(17) Department means any Department under any line Ministry of the Government.
(18) Division means any Division of the government of Bangladesh
(19) Domestic Debt means borrowing from the domestic market;
(20) External Debt means borrowing from the external sources;
(21) Finance Ministry means the Ministry of Finance;
(22) Financial Year means the year beginning on the 1st of July and ending on the 30th of
June following;
(23)
Government means the Government of the Peoples Republic of Bangladesh;
(24) Guarantor means the Surety or the entity which gives the guarantee.
(25) Local Government means the local bodies and administrative units referred to in
Article 59 of the Constitution of Bangladesh. Local Government Bodies have powers to
impose taxes for local purposes and to prepare their budgets and to
maintain funds.
(26) Maturity means the period for which a debt exists;
(27) Ministry means any line Ministry of the government of Bangladesh.
(28) Money Bill means a Bill as referred to in article 81 of the Constitution. As per
provisions of article 81(1) the borrowing of money or the giving of any
guarantee by the Government need to be included as a part of a Money
Bill.
(29) Non-recurring Expenditure means expenditure other than recurring expenditure;
(30) Principal Debtor" means the entity in respect of whose default the guarantee is given.
(31)
Public Account of the Republic means the Public Account of
Bangladesh referred to in Article 84(2) of the Constitution of Bangladesh;
(32) Public Works means civil works and irrigation, navigation, embankment and
drainage works;

(33) Recurring Expenditure means the expenditure which is incurred at periodic


intervals;
(34) Surety means the entity which gives the guarantee.
4. Objectives of Sovereign Guarantees/ Counter Guarantees in Bangladesh
Government may issue Guarantees and Counter-Guarantees to the Public Sector Enterprises
(PSEs) and other agencies for borrowings from the lending organizations such as Bangladesh
Bank, State Owned Commercial Banks, Private Sector Banks, EXIM Banks, Multi-national
Banks, Suppliers of Goods and Services etc. in order to enable PSEs and other agencies to
carry out activities of public interest, which may not be otherwise feasible due to financial
problems faced by these agencies.
Government guarantees may be normally extended for the purpose of achieving the following
objectives:

To improve financial viability of projects or activities undertaken by government entities,


which have significant social and economic benefits;

To enable Public Sector Enterprises (PSEs) to raise additional resources at lower


interest rates or on more favorable terms and conditions;

To fulfill the requirements where sovereign guarantee is a precondition for grant of


concessional loans by bilateral/ multilateral agencies to sub-sovereign borrowers.

To boost up the development and capacity enhancement for the priority sectors and
infrastructure sectors like power, energy, transport and communication sectors etc.

To provide guarantee for Agricultural Credit Programs, essential loans for working
capital shortage, re-financing, procurement of public goods and services, suppliers
credit and temporary fund crisis.

To provide counter guarantees mainly against loans for procurement of crude oil and
Petroleum Products, Urea, TSP, MOP fertilizer, white sugar, soybean oil, as well as
Syndicated Murabaha operation.

To provide counter guarantees against loans taken from EXIM banks for procurement of
plant, machinery, equipment or engagement of foreign consultants and technical people
for completion of turnkey projects;.

To raise resources for financing projects and activities under the Public-Private
Partnerships (PPP)3.

3 For details of policies and framework for the Public Private Partnership projects see
Invigorating Investment Initiative Through Public Private Partnership- A Position Paper, Finance
Division,, Ministry of Finance, Government of the Peoples'' Republic of Bangladesh, pp.1-23, June 2009.

5. Benefits of Sovereign Guarantees/ Counter Guarantees


Various benefits are kept in view by the government while granting guarantees to the public
sector enterprises. The dominant benefits include the following:

The basic advantage is that loans raised under sovereign guarantees do not increase
State borrowing, and the obligation of the government arises only when the principal
debtor fails to make debt services to the creditor.

Therefore, a guarantee is a more attractive fiscal measure for the government than the direct borrowing
for financing a project and there reproduced in the Annex-1 of this Guideline.

by avoiding a build-up of unsustainable public debt. This is more important in the case
of huge borrowing requirements with subsequent and attendant obligations for
repayment of debt and payment of interest charges over time.

Guarantee improves the flexibility of the borrowing options as the loan could be
tailored to reflect the borrowers needs regarding the maturity and terms of payment.

Guarantee offers spin-off benefits, particularly for large scale projects by bringing the
borrowers into direct contact with the lenders, providing direct and quick access to
new financing arrangements and market instruments.

Guarantees lead to diversification. This is a great advantage when the State


borrowing requirement is already large. In that case, small, cheap loans with a
specific structure may not suit the States borrowing plans, at least not for that
moment. Such loans may, therefore, suitably be channeled to the Beneficiaries.
6. General Legal Provisions Relating to Public Guarantees in Bangladesh

Finance Division of the Ministry of Finance is entrusted by the legislation to deal with contingent
liabilities. The main Act, Rules and Regulations dealing with contingent liabilities are as follows:
(a) Constitution of the Peoples Republic of Bangladesh, 19724
Chapter II of Part-V of the Constitution of the Peoples Republic of Bangladesh, 1972 deals with
the Legislative and Financial Procedures of the Government (reproduced as Annex-1 of this
Guideline). It provides powers to the Government as regards:

the borrowing of money or the giving of any guarantee by the Government, or


the amendment of any law relating to the financial obligations of the
Government; [Article-81(b)]; and

4 Constitution of the Peoples Republic of Bangladesh 1972, pp.1-57, Government of the Peoples
Republic of Bangladesh. 4th November 1972.

all debt charges for which the Government is liable, including interest, sinking
fund charges, the repayment or amortization of capital, and other expenditure
in connection with the raising of loans and the service and redemption of debt;
[Article-88 (d)].

Article 88. Charges on Consolidated Fund


The following expenditure shall be charged upon the Consolidated Fund
(d) all debt charges for which the Government is liable, including interest,
sinking fund
charges, the repayment or amortization of capital, and other expenditure in
connection
with the raising of loans and the service and redemption of debt;
(b) The Contract Act 18725
Under the Contract Act 1872, a contract is defined as an agreement enforceable at law, made
between two or more persons, by which rights are acquired by one or more to acts or
forbearances on the part of the other or others.
Section 2(h) of the Contract Act, 1872, provides the authoritative definition of a contract, an
agreement enforceable by law is a contract. It is a simple definition of the term contract given by
the Act. From the definition, it is found that, to be a lawful contract, an agreement is necessary
and that agreement must be lawful that is enforceable by law. A contract is thus a combination
of two ideas agreement and obligation.
In terms of the Contract Act, 1872 contract of guarantee is a contract to perform the promise,
or discharge the liability of a third person in case of his default. Where only two parties are
involved, i.e. where one party promises to save the other from loss caused to him by the
conduct of the promisor himself, or by the conduct of any other person, such a contract is called
a contract of indemnity. Sections 124 to 134 of Chapter-VIII of the Contract Act 1872 specify
the common law provisions relating to the contracts of indemnity or guarantee. These sections
are reproduced as Annex-2 of this Guideline.
(c) Rules of Business 19966
Rule 13 on Consultation with Finance Division stipulates that:
(1) No Ministry shall without previous consultations with Finance Division authorize any
orders not covered by the approved budget, which will affect directly or indirectly the
finances of the Republic and which in particular involves
(i)
relinquishment, remission or assignment of revenue, actual or potential, or grant
of guarantee against it;
5 The Contract Act, 1872, pp-1-73, governs the laws of contract in Bangladesh. The Act came into
force in the then Bengal on 1st September 1872, and was adopted by the Government of Bangladesh
without any change. It contains the common rules relating to all contracts in Bangladesh.

6 Rules of Business 1996 (Revised up to January 2009), pp.1-29, Cabinet Division, Government of the
Peoples Republic of Bangladesh.

(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)

expenditure for which no provision exists in the budget;


levy of taxes, duties, cesses or fees;
floatation of loan;
re-appropriation between major heads within budget grants;
alteration in the method of compilation of accounts or of the budget estimates;
receipt or expenditure of foreign exchange unless already allocated;
change in the terms and conditions of service of Government servants, and
employees of public corporations which have financial implications; and
interpretation of rules made by Finance Division.

(d) Allocation of Business (Schedule 1 of the Rules of Business 1996)7


Finance Division is responsible for the following items relating to contingent liabilities:
(17) Borrowing and floatation of market loans.
(23) Administration of public debt including loans and aids.
(24) Provident Fund.
(25) Matters relating to borrowing by public bodies such as Corporations, Municipalities etc.
(26) Institutional finance for development of industry, trade, agriculture and housing.
(e) The Public Moneys and Budget Management Act, 2009 (ACT NO.40 of 2009)8
Act 21on Borrowings in ChapterVI (Borrowings and Guarantee) stipulate that:
(1) The Government may borrow from domestic and external sources.
(2) No Ministry, Division, Other Institution, department or agency shall borrow any loan
other than the Ministries or Division or Other Institutions which have been
authorized to borrow on behalf of the Government.
(3) The Government may borrow to achieve following objectives:(a) To finance budget deficit;
(b) To implement any project or programme;
(c) On-lending to any agency;
(d) To pay back previous loans or financing any loans on their maturity;
(e) For any other purposes approved by the Parliament.
As per Act 22 on Guarantees No Ministry or Division shall issue any guarantee on behalf of
the Government other than the Finance Division.
7. Classifications of Guarantees / Counter-Guarantees
For the purpose of record keeping, guarantees/ counter guarantees shall be classified under
two broad groups as under:
(a) Class/ Category of Guarantees/ Counter Guarantees,
7 Allocation of Business Among the Different Ministries and Divisions (Schedule I of the Rules of
Business, 1996) (Revised up to July 2012), pp.1-86, Cabinet Division, Government of the Peoples
Republic of Bangladesh

8 The Public Moneys and Budget Management Act, 2009 (ACT NO.40 of 2009), pp.1-9, 9
July 2009.
10

(b) Sectors of Guarantees/ Counter Guarantees


(a) Class/ Category
(i)
(ii)
(iii)
(iv)
(v)

Guarantees/ Counter Guarantees given to the Bangladesh Bank;


Guarantees given to other banks and financial institutions;
Guarantees given to international financial institutions and foreign governments;
Guarantees given to foreign lending agencies, EXIM banks, contractors, consultancy
and management firms, and suppliers of goods, services, materials, turnkey projects,
plants, machinery and equipment etc.;
Others.

(b) Sector
(i) Agricultural credits
(ii) Bangladesh Petroleum Corporation
(iii) Trade / Procurement of Fertilizers, Sugar, Edible Oil, Pulses
(iv) Other Sectors
8. Conditions for Issue of Guarantees/ Counter Guarantees
(1) Power to grant Government Guarantee: Powers to grant Government Guarantees/
Counter Guarantees shall vest with the Finance Division of the Ministry of Finance. No
guarantees/ Counter Guarantees to any entity shall be given without the specific approval
of the Ministry of Finance.
(2) Conditions for Grant of Guarantee: The Treasury and Debt Management Wing (TDMW)
of the Finance Division (FD) shall act as the nodal agency for the issue, approval,
execution and monitoring of guarantees/ counter guarantees. The following guidelines
should be followed by the Ministries or Divisions or the Public Sector Enterprises (PSEs) of
the Government of Bangladesh for recommending guarantee or counter guarantee:(i)

A proposal for guarantee must be justified by public interest such as in the case of
borrowings by public sector enterprises for approved development purposes or
borrowings by public sector enterprises from Banks for working capital, trade capital
and other purposes directly linked with the delivery of public goods and services.

(ii)

The concerned Ministry/ Division shall examine the proposal in consultation with their
Budget Management Wing (BMW)/ Branch (BMB)/ Section in the same manner as a
proposal for loan is examined and evaluated. While examining the proposal the
following considerations shall be kept in view:
(a) Public interest which the guarantee/ counter guarantee is expected to serve.
(b) Whether search was made from bilateral and multilateral sources under
concessional/ semi-concessional fund.
(c) Normally the terms and conditions of the borrowing should be soft in nature.
Otherwise, the approval from the Hard Term Loan Standing Committee
(HTLSC) must be taken.

11

(d) Financial and physical performance and past repayment records during last
three years, and credit worthiness and repayment capacity of the borrower to
ensure that no undue risk is involved.
(e) Terms of the borrowing take into account the yields as applicable on the
Treasury Bonds of similar maturity.
(f) The conditions prescribed in the guarantees in order to ensure continued credit
worthiness of the borrower.
(g) In case of borrowings in the form of suppliers/ buyers credit, the policy and
procedure of suppliers credit/ buyers credit (Memo no./-3/Niti-20/2002
dated 07/09/2006 issued by the Economic Relations Division (ERD), Ministry of
Finance (MOF) must be followed.
(h) In case of borrowings from external sources to finance for any approved
project, opinion shall be taken from the Economic Resource Division (ERD) of
Ministry of Finance (MOF).
(i) In every cases, the guarantee format, guarantee agreement (if any) and loan
agreement must be vetted by the law ministry. The line Ministry/ Division shall
take necessary steps to take the vetting.
(j)

In case of sending new proposal for guarantees/counter-guarantees, the loan


repayment schedule shall be attached with the proposal. Moreover, updated
status of guarantees/counter-guarantees issued previously, shall be notified to
the Finance Division (FD), Ministry of Finance (MOF) along with the new
proposal.

(iii)

Government guarantees/ Counter Guarantees shall not be provided to the private


sector. However, guarantees and counter guarantees can be provided to any
projects/ programs or enterprises under the Public-Private Partnership (PPP).

(iv)

Government guarantees should normally not be extended for external commercial


borrowings from private sources except for short term trade credits to ensure delivery
of public goods and services.

(v)

Government guarantees may be given on all soft loan components of the multilateral
or bilateral aid. However, in general, guarantees should not be given for the
commercial loan components of such aid except for large infrastructure projects such
as power generation, construction of bridges, metro rail etc. In such cases, however,
extension of Government guarantee may be considered on a case to case basis.

(vi)

Government guarantee will not 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.

(vii)

The conditions, if any which should be made by the Government while giving the
guarantee or counter guarantee, should be clearly specified e.g. period of guarantee,
levy of guarantee fee, if any, to cover risk, representation of Government Nominee
Director on the Board of Management, Mortgage or lien on the assets, submission to
Government of periodical implementation and performance reports and accounts,
right to get the accounts audited on behalf of the Government etc. Even if fee,
12

representation and mortgage are not considered necessary, the right to verify the
continued creditworthiness of the borrower should be ensured.
(viii)

The guarantee/counter-guarantees cover shall be limited only to the payment of


principal and normal interest in case of default. GOB shall not be liable to pay any
penal interest/any other charges;

(ix)

The guarantee/counter-guarantees once given would not be transferable to any other


agency.

(x)

Deviations/ modifications/ amendments on the main conditions of the Guarantee/


counter-guarantees, particularly with reference to the rate of interest on the loan to
be guaranteed and obligations to be covered, should not be referred in a routine
manner for clarification/ change through the instrument of guarantee/ counterguarantees format once the conditions of the guarantee are approved by the Finance
Division. The Administrative Ministry concerned shall make out a separate case, fully
justifying the need for considering any proposed modification/ amendments, after
thorough scrutiny of the request of the borrower for the same, for placing these
proposals before the Finance Minister for a final decision.

(xi)

The borrowing should relate to approved Projects.

(xii)

Wherever guarantee is to be given by Government of Bangladesh, the borrower shall


enter into an agreement with the Government of Bangladesh for payment of
guarantee fee, as may be determined by the Finance Division, Ministry of Finance,
on the principal amount of the loan drawn and loan outstanding from time to time.

(xiii)

The borrower shall bear the exchange risk and get the funds directly on terms and
conditions prescribed by the lending agency.

(xiv)

In case of default, the lending agency shall invoke the Guarantee within a time limit
not exceeding 90 days of the default. In case the guarantee is not invoked within the
stipulated period, the guarantee would cease to exist for that portion of the tranche/
loan/ liability for which guarantee has not been invoked;

(xv)

The Administrative Ministry/Division should review proper utilization of the


guaranteed funds and will also review the guarantees annually to ensure that there is
no risk of default in repayment of loans together with interest thereon as well as the
guarantee fee payable to the Government;
9. Procedures for Issue and Approval of
Guarantees/ Counter Guarantees

If State Owned Enterprises (SOEs)/ other agencies face Cash shortages, they can approach
commercial banks/ financial agencies for loans for working capital. On the basis of the financial
and physical performance/ credit worthiness/ repayment capacity and past repayment records,
financial agency may demand for Sovereign Guarantee (SG) before granting any loans to the
SOEs. In such cases the SOEs and other Agencies need to apply to the Finance Division
through their Ministries/ Divisions for approval of specific guarantees and counter guarantees.

13

After examination of the desired guarantees and counter guarantees as per conditions laid
down in Section-8, the concerned Ministry or Division shall refer proposals to the TDMW,
Finance Division of the Ministry of Finance. With a view to enable the TDMW to examine cases
of Government guarantees and extension thereto, all Ministries/ Divisions should send their
request to the TDMW in prescribed Format (given in Annex-3) with the requisite data and
information regarding the guaranteed loans and desired operational and financial parameters of
the PSEs/ Entities in favor of which the guarantees and counter guarantees are required to be
issued and also the financial performance of the Banks/ Financial Institutes providing loans or
guarantees. In case the accounts of the PSEs/Beneficiary Entities have been audited by the
Comptroller & Auditor General (CAG) of Bangladesh, the comments of the CAG on the PSEs
financial and operational statements should be brought out.
If the proposed interest rate is higher than 5%, the proposal shall be placed to the Hard TermLoan Standing Committee9 under the Treasury and Debt Management Wing (TDMW) for its
approval.
After obtaining necessary vetting from the M/O Law on proposed SG, the proposal is to be
forwarded to the Contingent Liability Management (CCLM) Section10 of the Finance Division,
Ministry of Finance for further processing and examination. On receiving request from the line
ministry, CCLM woill seek comments from the Monitoring Cell, and if needed, from the Budget
Wing for processing of Sovereign Guarantee. After favorable recommendations, CCLM section
will processes line ministrys request for Sovereign Guarantee for the final approval by the
Honble Finance Minister.
Once approved by the Finance Minister, Sovereign Guarantee will be issued in favor of the
lending financial agency, and it will be executed and monitored by the Administrative Ministry
concerned. The concerned Ministry is also required to annually report the status of the
guarantee in this regard, until the guarantee falls due or expires.
10. Limits on Guarantee Flows and Stocks
As per international best practices annual flows and total stocks of contingent liabilities may be
fixed for individual guarantees, sector guarantees and overall guarantees either as an absolute
size or in terms of some ratios (such as percentages of GDP at current market prices).
The Middle Office for Debt Management within TDMW in the Finance Division in consultation
with the Cash and Debt Management Committee (CDMC) shall act as the nodal agency for
9 Hard Term Loan Standing Committee (HTLC) under the administrative control of the Treasury and
Debt Management Wing (TDMW) of the Finance Division (FD), Ministry of Finance (MOF) was formed in
1980 to consider cases of public borrowing that is non-concessional and tenure of which is relatively
short. The Committee is headed by the Minister for Finance and includes the Minister for Planning,
Governor of Bangladesh Bank, Finance Secretary, Secretary of Commerce, Secretary of ERD and Joint
Secretary of ERD as members.
10 Contingent Liability Management (CLM) Section under the Debt Management Branch (DMB),
Treasury and Debt Management Wing (TDMW) of the Finance Division (FD), Ministry of Finance, on
behalf of the Government of Bangladesh, issues guarantees and counter-guarantees and maintains their
records. It is also responsible for preparing debt database.

14

determination of limits on guarantees and counter guarantees for both domestic and external
borrowings. It may also prescribe limits for total, sector wise or lender wise guarantees/ counter
guarantees on both domestic and external borrowings in consultation with the front offices for
public debt (i.e. ERD, FABA and Bangladesh Bank for external loans; Bangladesh Bank for bulk
domestic borrowings and National Savings Directorate for retail domestic debt) and play an
active role for evolving monitoring and evaluation systems for identification, measurement,
monitoring, reporting and management of risk.
The following tentative limits may be considered by the Finance Division:
Table-1: Tentative Limits on Guarantees
Sl. No.

Types

As percentage
of GDP
One percent

Annual flow of guarantees/ counter guarantees

Issue of new individual guarantee/ counter guarantee

0.5 percent

Total outstanding guarantees/ counter guarantees (net)

30 percent

Total outstanding guarantee/ counter guarantee for trade credits

10 percent

Total outstanding guarantee/ counter guarantee for external debt

15 percent

Total outstanding guarantee/ counter guarantee for domestic debt

15 percent

11. Guarantee Redemption Fund/ Contingent Liability Redemption Fund.


As per international best practices, a Guarantee Redemption Fund (GRF) or a Contingent
Liability Redemption Fund may be established in the Public Account of Bangladesh for
redemption of guarantees/ counter guarantees given to PSEs, Banks, Financial Institutions etc.
by the Government whenever such guarantees/ counter guarantees are invoked. The fund may
be fed through budgetary appropriations with an annual provision in the Budget Estimates (BE),
say amounting to 1 percent of total budgeted expenditure under the head 'Transfer to
Guarantee Redemption Fund' (under the Demand for Gants of the Finance Division). The
Guarantees Fees/ Commissions, charged while granting guarantees and counter guarantees,
will also accrue to the Guarantee Redemption Fund.
Subsequently, any expenditure or payment relating to redemption of any guarantee/ counter
guarantee will be charged to the Guarantee Redemption Fund or the Contingent Liability
Redemption Fund (if such funds exist) maintained in the Public Account.
12. Levy of Guarantee Fees/ Commission
(1) As per international best practices, it is advisable to charge some guarantee fees to cover
the risk for issuing guarantees and counter guarantees. The following rates of fee on
15

guarantees may be fixed by the Finance Division and may be reviewed from time to time.
In case of any doubt with regard to the categorization of any particular undertaking or
organization or the nature of borrowing for the purpose of levy of fee, the matter may be
referred to the TDMW, Finance Division for clarification. The Ministries and Divisions should
also take adequate steps to ensure prompt recovery of the prescribed fees.
Table-2: Fees for Issuing Guarantees and Counter Guarantees
Sl.No.
1.
2.
3.
(a)
(b)
(c)
4.

Type of Borrowing
Borrowing under the market borrowing program approved
by the Bangladesh Bank and the Finance Division
Borrowing under inter Public Sector Enterprises Transfer
Other Domestic Borrowings
Public Sector Enterprises
Public-Private Partnerships
Other Sectors
External Borrowing

Rate of Guarantee
Fee (% per annum)
0.25
0.25
0.50
0.75
1.50
1.20

(2) The guarantee fee should be levied before the guarantee is given and thereafter on first
July every year. The rate of guarantee fee is to be applied on the amount outstanding
(principal plus the annual interest charges) at the beginning of the guarantee year. Where
the guarantee fee is not paid on the due date, penalty fee should be charged at double the
normal rates for the period of default.
(3) Guarantee Fees/ Commission would accrue to the Guarantee Redemption Fund or
Contingent Liability Redemption Fund, if such a fund is created by an Act of Parliament.
Until such time, the fees would accrue to the Public Fund and can be utilized only for the
redemption of contingent liabilities in case of default by the borrower for the payment of
debt services of the guaranteed loans.
13. Monitoring and Review of Guarantees
(1) All Ministries/ Divisions shall ensure that all guarantees/ counter guarantees are
monitored and reviewed every quarter. The monitoring or review undertaken should
examine whether the borrower/ beneficiary is discharging repayment obligations or
interest obligations in time and as per terms and conditions of the loan agreement.
(2) They shall also ensure that a register of guarantees as per prescribed Format in
Annex-4 is maintained :(i)
to keep a record of guarantees/ counter guarantees;
(ii)
to retain information required from time to time in respect of guarantees;
(iii)
to keep record of the periodical reviews to see that these are carried out
regularly;
(iv)
to keep record of levy and recovery of guarantee fee;
(v)
to send data as contained in the prescribed Form, duly updated every quarter
to the Treasury and Debt Management Wing, Finance Division in the Ministry of
Finance by fifteenth of the month following the quarter.
16

14. Accounting and Auditing for Guarantees


A statement showing the guarantees given by the Government is required to be annexed to the
Detailed Demands for grants prepared by the Ministries or Divisions. The statements should
show the position up to 30th June of the second preceding fiscal year, to the fiscal year to which
the Budget documents relate. For example, the Budget documents for the Fiscal Year 2014-15
will show the position of guarantees/ counter guarantees outstanding as at the 30 th June 2013.
The form in which the statement of guarantees is to be shown would be prescribed in the
Budget Circulars. Where interest payments are also guaranteed, the outstanding shown under
the columns for sums guaranteed and outstanding should disclose the interest element
outstanding, if any, separately. While furnishing the summary statement of guarantees to the
Finance Division, the Ministries or Divisions should ensure and certify that the amounts shown
tally with the total figures in the statement to be included in the Detailed Demands for grants.
While furnishing the summary statements, the Ministries or Divisions should also certify that the
information tallies with the material furnished to the Controller General of Accounts for the
purpose of inclusion in the Finance Accounts of the relevant year.
Format of Disclosure Statement in Financial Statement is given in Annex-5.
15. Invocation of Guarantee/ Counter Guarantees
In the event of invocation of a guarantee/ counter guarantee, the obligation may be discharged
by sanctioning loan equal to the amount of guarantee/ counter guarantee outstanding with the
approval of Finance Division, Ministry of Finance. However, any payment on this account will
finally be charged to the Guarantee Redemption Fund or the Contingent Liability Redemption
Fund (if such funds exist) maintained in the Public Account.
16. Management of Risk and Prioritization of Guarantees
The volume of Sovereign guarantees undertaken during a financial year may be limited to the
specified limits fixed by the government as indicated under Table-1 above. In order to ensure
greater transparency in its fiscal operations in the public interest, Finance Division needs to
publish a disclosure statement on guarantees given by government, as a part of the annual
financial statement and demands for grants. This statement may provide, inter alia, details
regarding the class and number of guarantees, amounts guaranteed, outstanding, invocations,
guarantee fee payable and other material details. These statements will be compiled by the
TDMW with the support of Line Ministries/ Divisions. The Format is given in Annex-5.
The best and often the only time to regulate fiscal risk effectively is before the decision is taken
to issue guarantees/ counter guarantees. With a view to achieving better management and
control of fiscal risks and associated fiscal costs due to assumption of contingent liabilities, the
following principles are required to be followed by the concerned authorities, before new
contingent liabilities are undertaken in the form of sovereign guarantees/ counter guarantees:a. Risk associated with assumption of a new guarantee/ counter guarantee, including the
probability of future payouts is required to be thoroughly assessed by the concerned
Administrative Ministry/ Division recommending the proposal. Such assessment should
ideally be entrusted to an independent and technical unit and should be undertaken
even when it has already been decided by a higher authority to provide guarantees.
The assessment should reveal an accurate picture of the financial conditions of the
17

entity in favor of which guarantees/ counter guarantees have been issued; risks
associated with implementation of the project/ scheme, etc. This information would be
useful to estimate the funds required to meet such liabilities, if the need should arise,
for current or future budgets.
b. In cash based budgeting, since losses are recognized only when payments are
actually made and not when liabilities are incurred, it is considered expedient to
specify limits for not only the volume of guarantees to be issued during the year for the
budget as a whole but also limits on the volume of guarantees each Ministry/ Division.
The Ministries/ Divisions should send their prioritized list of proposals for guarantees
before 30th June every year to the TDMW of the Finance Division. The list should
prioritize the proposals and include only such proposals where the loan agreement can
be signed during the financial year. Individual Ministries/ Divisions are also expected to
closely review the outstanding stock of guarantees/ counter guarantees issued by
them as a proportion of their annual budgetary provisions and examine the need,
quantum and scope of the guarantee/ counter guarantee with the objective of further
containing Government exposure.
c.

All such lists received would be looked at by the TDMW for drawing up an overall
prioritized list. This list would only imply that the proposals will be considered for
guarantee during the year. Individual proposals will have to be sent to the Finance
Division separately. A mid-year review in the month of March of each year shall be
undertaken by the TDMW based on actual and likely utilization of approved guarantees
to re-prioritize the guarantee requirement.

d. Guarantees may not be proposed for pursuing low priority projects or programs.
Proposal for grant of guarantee as an off-budget support should also be examined
comprehensively by the proposing Ministry/ Division against other alternative forms of
support which may be more appropriate and cost-effective. For example, in the case of
provision of credit guarantees to Public Sector Enterprises that continually incur
losses, while there may be good reasons to support such enterprises if their losses are
a result of governments administered pricing policy, budgetary subsidies or direct
government loans may be a more effective and less costly option.
e. Approval of Government Guarantee puts a bigger responsibility on the concerned
administrative Ministries/ Divisions of the PSEs, who should be more diligent to ensure
that there is no devolution. In other words there should be a thorough scrutiny of the
loan proposal by both the lending and borrowing agencies. Existence of a government
guarantee should not become a substitute for financial prudence.
f.

Guarantees may not also be proposed in respect of PSEs whose strong financial
credentials and high credit rating would indicate inherent ability to directly raise the
required resources without the support of government guarantee.

Additional Measures for Risk Management:


The following additional measures may be taken for management of risks associated with the
issue of guarantees and counter guarantees:

18

(i) Providing partial guarantee- Government may guarantee no more than 70% to
90% of the credits in certain cases, depending on the credit worthiness of the entity
to be covered. This would incentivize the borrowers and lenders and other
stakeholders to make proper analysis of the project, credit worthiness of the
borrowers, and build in strategies for risk management.
(ii) Charging risk-based premia- this requires that every proposal for guarantee will be
assessed independently and the guarantee fee would be fixed on the basis of the
assessment of risk. The more risky projects would have a guarantee fee greater than
the base level prescribed in Table-2.
(iii) Sharing payouts in case of default- Government may also reduce its exposure by
paying for the last rather than the first loss, by setting deductibles that must be
satisfied before it makes payment. Under the deductible arrangement in case of
default of guarantee, Government would pay 70% to 90% of the amount in default
and the balance 10% to 30% would be paid by the borrower. At first the borrowing
entity would have to pay 10% to 30% and then would approach the Government for
settling balance amount. This would require that the borrowing entity identifies
resources from its own internal resources/ assets to meet its obligation.
(iv) Rigorous financial appraisal of the proposal- Before guarantee proposal is
tendered, the sponsoring Ministry/ Division must thoroughly analyze the economic
and financial viability of the project and demonstrate that it cannot be financed
without governments assistance and that cash flows will be adequate to cover
repayment of the debt as well as interest.
(v) Monitoring use of guarantees- Government may also seek to safeguard its interest
and mitigate moral hazard and loss by regulating the actions of the beneficiaries of
sovereign guarantees and by monitoring the proper use of guaranteed funds. This
has to be done to eliminate any perverse incentive for willful default.
(vi) Sharing loss by lenders- Bankers/ lenders may be asked to share the risk by
bearing a minimum of 10% to 30% of the net loss associated with any default. The
arrangement would give lenders an incentive to undertake a more rigorous
assessment of the risk exposure.
(vii) Benchmarking of interest rates- Interest rates on guaranteed loans should
invariably be benchmarked at the governments cost of funds. Governments liability
for meeting interest defaults may be restricted to the benchmark level, i.e., equivalent
to G-Securities of comparable maturity with a suitable spread.
(viii) Accounting and Auditing/ General Financial Rules- It is also desirable to
formulate Accounting and Auditing Standards and Rules for Disclosure and Financial
Statements on government guarantees and counter guarantees.
17. Role of Bangladesh Bank to Monitor Financial Performance of Banks
(a) The Bangladesh Bank may review the current prudential requirements for provisioning
and income recognition for guaranteed loans and investments, capital adequacy norms
for commercial banks and financial institutions, investment in Government guaranteed
19

bonds for infrastructure development and financing of Special Purpose Vehicles


(SPVs). However, it may be mentioned that application of enhanced risk weights for
capital adequacy norms is not a substitute for effective appraisal of projects.
(b) The Bangladesh Bank may advise all commercial banks and financial institutions that
while they are free to sanction term loans and guarantees for technically feasible,
financially viable and bankable projects undertaken by both public sector and private
sector enterprises, they shall fully satisfy themselves that the projects financed by them
have income generating capacity sufficient to service such loans and that these loans
and guarantees would not become contingent liabilities for the government.
(c) Commercial banks and financial institutions should also give due diligence to judge the
credit-worthiness of the public sector and private enterprises and monitor efficiently the
proper utilization of the funds borrowed from only for the specific purposes. In brief,
lending/ investment decisions of the commercial banks and financial institutions should
be based solely on their commercial judgment. There should be no compromise on
proper credit appraisal and close monitoring of the projects financed and banks should
ensure that only projects that are intrinsically viable are financed.
(d) Guarantees issued by the Bangladesh Bank and guarantees and counter guarantees
provided by the Government should never be taken as a substitute for satisfactory exante and ex-post credit appraisal of projects.
18. Compliance
The extant guidelines on the procedure to be followed for approval of government guarantees/
counter guarantees would continue. Any deviation from the extant guidelines and the new policy
would require the approval of the Finance Minister.

20

Annex-1
Extract from the Constitution of the Peoples Republic of Bangladesh
4th November 1972
CHAPTER II- LEGISLATIVE AND FINANCIAL PROCEDURES
80. Legislative procedure
(1) Every proposal in Parliament for making law shall be made in the form of a Bill.
(2) When a Bill is passed by Parliament it shall be presented to the President for assent.
(3) The President, within fifteen days after a Bill is presented to him shall assent to the Bill or, in
the case of a Bill other than a money Bill may return it to parliament with a message requesting
that the Bill or any particular provisions thereof by reconsidered, and that any amendments
specified by him in the message be considered; and if he fails so to do he shall be deemed to
have assented to the Bill at the expiration of that period.
(4) If the President so returns the Bill Parliament shall consider it together with the President's
message, and if the Bill is again passed by Parliament with or without amendments 51 by the
votes of a majority of the total number of members of Parliament , it shall be presented to the
President for his assent, whereupon the President shall assent to the Bill within the period of
seven days after it has been presented to him, and if he fails to do so he shall be deemed to
have assented to the Bill on the expiration of that period.
(5) When the President has assented or is deemed to have assented to a Bill passed by
Parliament it shall become law and shall be called an Act of Parliament.
81. Money Bills
(1) In this Part "Money Bill" means a Bill containing only provisions dealing with all or any of the
following matters(a) the imposition, regulation, alteration, remission or repeal of any tax;
(b) the borrowing of money or the giving of any guarantee by the Government, or the
amendment of any law relating to the financial obligations of the Government;
(c) the custody of the Consolidated Fund, the payment of money into, or the issue or
appropriation of moneys from, the Fund;
(d) the imposition of a charge upon the Consolidated Fund, or the alteration or abolition of any
such charge;
(e) the receipt of moneys on account of the Consolidated Fund or the Public Account of the
Republic, or the custody or issue of such moneys, or the audit of the accounts of the
Government;
(f) any subordinate matter incidental to any of the matters specified in the foregoing subclauses.
(2) A Bill shall not be deemed to be a Money Bill by reason only that it provides for the
imposition or alteration of any fine or other pecuniary penalty, or for the levy or payment of a
license fee or a fee or charge for any service rendered, or by reason only that it provides for the
imposition, regulation, alteration, remission or repeal of any tax by a local authority or body for
local purposes.
(3) Every Money Bill shall, when it is presented to the President for his assent, bear a certificate
under the hand of the Speaker that it is a Money Bill, and such certificate shall be conclusive for
all purposes and shall not be questioned in any court.
21

82. Recommendation for financial measures


No Money Bill, or any Bill which involves expenditure from public moneys, shall be introduced
into Parliament except on the recommendation of the President: Provided that no
recommendation shall be required under this article for the moving of an amendment making
provision for the reduction or abolition of any tax.
83. No taxation except by or under Act of Parliament
No tax shall be levied or collected except by or under the authority of an Act of Parliament.
84. Consolidated Fund and the Public Account of the Republic
(1) All revenues received by the Government, all loans raised by the Government, and all
moneys received by it in repayment of any loan, shall form part of one fund to be known as the
Consolidated Fund.
(2) All other public moneys received by or on behalf of the Government shall be credited to the
Public Account of the Republic.
85. Regulation of public moneys
The custody of public moneys, their payment into and the withdrawal from the Consolidated
Fund or, as the case may be, the Public Account of the Republic, and matters connected with or
ancillary to the matters aforesaid, shall be regulated by Act of Parliament, and until provision in
that behalf is so made, by rules made by the President.
86. Moneys payable to Public Account of Republic
All moneys received by or deposited with-(a) any person employed in the service of the
Republic or in connection with the affairs of the Republic, other than revenues or moneys which
by virtue of clause (1) of article 84 shall form part of the Consolidated Fund; or
(b) any court to the credit of any cause, matter, account or persons, shall be paid into the Public
Account of the Republic.
87. Annual financial statement
(1) There shall be laid before Parliament in respect of each financial year, a statement of the
estimated receipts and expenditure of the Government for that year, in this Part referred to as
the annual financial statement.
(2) The annual financial statement shall show separately(a) the sums required to meet expenditure charged by or under this Constitution upon the
Consolidated Fund; and
(b) the sums required to meet other expenditure proposed to be made from the Consolidated
Fund; and shall distinguish expenditure on revenue account from other expenditure.
88. Charges on Consolidated Fund
The following expenditure shall be charged upon the Consolidated Fund) the remuneration
payable to the President and other expenditure relating to his office;
(b) the remuneration payable to(i) the Speaker and Deputy Speaker
(ii) the Judges of the 53 Supreme Court 54* * *
22

(iii) the Comptroller and Auditor-General;


(iv) the Election Commissioners;
(v) the members of the Public Service Commissions;
(c) the administrative expenses of, including remuneration payable to, officers and servants of
Parliament, the Supreme Court 55* * the Comptroller and Auditor- General, the Election
Commission and the Public Service Commission;
(d) all debt charges for which the Government is liable, including interest, sinking fund charges,
the repayment or amortization of capital, and other expenditure in connection with the raising of
loans and the service and redemption of debt;
(e) any sums required to satisfy a judgment, decree or award against the Republic by any court
or tribunal; and
(f) any other expenditure charged upon the Consolidated Fund by this Constitution or by Act of
Parliament.
89. Procedure relating to annual financial statement
(1) So much of the annual financial statement as relates to expenditure charged upon the
Consolidated Fund may be discussed in, but shall not be submitted to the vote of, Parliament
(2) So much of the annual financial statement as relates to other expenditure shall be submitted
to Parliament in the form of demands for grants, and Parliament shall have power to assent to
or to refuse to assent to any demand, or to assent to it subject to a reduction of the amount
specified therein.
(3) No demand for a grant shall be made except on the recommendation of the President.
90. Appropriation Act
(1) As soon as may be after the grants under article 89 have been made by Parliament there
shall be introduced in Parliament a Bill to provide for appropriation out of the Consolidated Fund
of all moneys required to meet(a) the grants so made by Parliament; and
(b) the expenditure charged on the Consolidated Fund but not exceeding in any case the
amount shown in the annual financial statement laid before Parliament.
(2) No amendment shall be proposed in Parliament to any such Bill which has the effect of
varying the amount of any grant so made or altering the purpose to which it is to be applied, or
of varying the amount of any expenditure charged on the Consolidated Fund.
(3) Subject to the provisions of this Constitution no money shall be withdrawn from the
Consolidated Fund except under appropriation made by law passed in accordance with the
provisions of this article.
91. Supplementary and excess grants
If in respect of any financial year it is found(a) that the amount authorized to be expended for a particular service for the current financial
year is insufficient or that a need has arisen for expenditure upon some new
service not included in the annual financial statement for that year; or
(b) that any money has been spent on a service during a financial year in excess of the amount
granted for that service for that year. the President shall have power to authorize expenditure
from the Consolidated Fund whether or not it is charged by or under the Constitution upon that
Fund and shall cause to be laid before Parliament a supplementary financial statement setting
out the estimated amount of the expenditure or, as the case may be an excess financial
statement setting out the amount of the excess, and the provisions of articles 87 to 90 shall
23

(with the necessary adaptations) apply in relation to those statements as they apply in relation
to the annual financial statement.
92. Votes on account, votes of credit, etc.
(1) Notwithstanding anything in the foregoing provisions of this Chapter, Parliament shall have
power(a) to make any grant in advance in respect of the estimated expenditure for a part of any
financial year pending the completion of the procedure prescribed in article 89 for the voting of
such grant and the passing of a law in accordance with the provisions of article 90 in relation to
that expenditure;
(b) to make a grant for meeting an unexpected demand upon the resources of the Republic
when on account of the magnitude or the indefinite character of the service the demand cannot
be specified with the details ordinarily given in an annual financial statement;
(c) to make an exceptional grant which forms no part of the current service of any financial year;
and Parliament shall have power to authorize by law the withdrawal of moneys from the
Consolidated Fund for the purposes for which such grants are made.
(2) The provisions of articles 89 and 90 shall have effect in relation to the making of any grant
under clause (1), and to any law to be made under that clause, as they have effect in relation to
the making of a grant with regard to any expenditure mentioned in the annual financial
statement and to the law to be made for the authorization of appropriation of moneys out of the
Consolidated Fund to meet such expenditure.
(3) Notwithstanding anything contained in the foregoing provisions of the this Chapter, if, in
respect of a financial year, Parliament(a) has failed to make the grants under article 89 and pass the law under article 90 before the
beginning of that year and has not also made any grant in advance under this article; or (b) has
failed to make the grants under article 89 and pass the law under article 90 before the expiration
of the period for which the grants in advance, if any, were made under this article, the President
may, upon the advice of the prime Minister, by order, authorize the withdrawal from the
Consolidated Fund moneys necessary to meet expenditure mentioned in the financial statement
for that year for a period not exceeding sixty days in year, pending the making of the grants and
passing of the law.

24

Annex-2
Extract from the Contract Act 1874
(ACT NO. IX OF 1872).
[25th April, 1872

CHAPTER III
OF CONTINGENT CONTRACTS
31. A "contingent contract" is a contract to do or not to do something, if some event, collateral to
such contract, does or does not happen.
Illustration
A contracts to pay B Taka 10,000 if B's house is burnt. This is a contingent contract.
32. Contingent contracts to do or not to do anything if an uncertain future event happens cannot
be enforced by law unless and until that event has happened.
If the event becomes impossible, such contracts become void.
Illustrations
(a) A makes a contract with B to buy B's horse if A survives C. This contract cannot be enforced
by law unless and until C dies in A's lifetime.
(b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse
has been offered, refuses to buy him. The contract cannot be enforced by law unless and until C
refuses to buy the horse.
(c) A contract to pay B a sum of money when B marries C. C dies without being married to B.
The contract becomes void.
33. Contingent contracts to do or not to do anything if an uncertain future event does not
happen can be enforced when the happening of that event becomes impossible, and not before.
Illustration
A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The
contract can be enforced when the ship sinks.
34. If the future event on which a contract is contingent is the way in which a person will act at
an unspecified time, the event shall be considered to become impossible when such person
does anything which renders it impossible that he should so act within any definite time, or
otherwise than under further contingencies.
Illustration
A agrees to pay B a sum of money if B marries C.
C marries D. The marriage of B to C must now be considered impossible, although it is possible
that D may die and that C may afterwards marry B.
35. Contingent contracts to do or not to do anything if a specified uncertain event happens
within a fixed time become void if, at the expiration of the time fixed, such event has not
happened, or if, before the time fixed, such event becomes impossible.
25

Contingent contracts to do or not to do anything if a specified uncertain event does not happen
within a fixed time may be enforced by law when the time fixed has expired and such event has
not happened or, before the time fixed has expired, if it becomes certain that such event will not
happen.
Illustrations
(a) A promises to pay B a sum of money if a certain ship returns within a year. The contract may
be enforced if the ship returns within the year, and becomes void if the ship is burnt within the
year.
(b) A promises to pay B a sum of money if a certain ship does not return within a year. The
contract may be enforced if the ship does not return within the year, or is burnt within the year.
36. Contingent agreements to do or not to do anything, if an impossible event happens, are
void, whether the impossibility of the event is known or not to the parties to the agreement at the
time when it is made.
Illustrations
(a) A agrees to pay B 1,000 Taka if two straight lines should enclose a space. The agreement is
void.
(b) A agrees to pay B 1,000 Taka if B will marry A's daughter C. C was dead at the time of the
agreement. The agreement is void.

CHAPTER VIII
OF INDEMNITY AND GUARANTEE
"Contract of indemnity" defined.
124. A contract by which one party promises to save the other from loss caused to him by the
conduct of the promisor himself, or by the conduct of any other person, is called a "contract of
indemnity."
Illustration
A contracts to indemnify B against the consequences of any proceedings which C may take
against B in respect of a certain sum of 200 Taka. This is a contract of indemnity.
Rights of indemnity-holder when sued.
125. The promisee in a contract of indemnity, acting within the scope of his authority, is entitled
to recover from the promisor
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which
the promise to indemnify applies ;
(2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he
did not contravene the orders of the promisor, and acted as it would have been prudent for him
to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or
defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the
compromise was not contrary to the orders of the promisor, and was one which it would have
been prudent for the promisee to make in the absence of any contract of indemnity, or if the
promisor authorized him to compromise the suit.

26

"Contract of guarantee ", "surety", "principal debtor " and "creditor".


126. A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a
third person in case of his default. The person who gives the guarantee is called the "surety";
the person in respect of whose default the guarantee is given is called the "principal debtor",
and the person to whom the guarantee is given is called the "creditor". A guarantee may be
either oral or written.
Consideration for guarantee.
127. Anything done, or any promise made, for the benefit of the principal debtor, may be a
sufficient consideration to the surety for giving the guarantee.
Illustrations
(a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will
guarantee the payment of the price of the goods. C promises to guarantee the payment in
consideration of As promise to deliver the goods. This is a sufficient consideration for C's
promise.
(b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a
year, and promises that if he does so, C will pay for them in default of payment by B. A agrees to
forbear as requested. This is a sufficient consideration for C's promise.
(c) A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for them
in default of B. The agreement is void.
Surety's liability.
128. The liability of the surety is co-extensive with that of the principal debtor, unless it is
otherwise provided by the contract.
Illustration
A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonored
by C. A is liable not only for the amount of the bill but also for any interest and charges which
may have become due on it.
Continuing guarantee.
129. A guarantee which extends to a series of transactions is called a "continuing guarantee".
Illustrations
(a) A, in consideration that B will employ C in collecting the rents of B's Zamindari, promises B
to be responsible, to the amount of 5,000 Taka, for due collection and payment by C of those
rents. This is a continuing guarantee.
(b) A guarantees payment to B, a tea-dealer, to the amount of 100, for any tea he may from
time to time supply to C. B supplies C with tea to above the value of 100, and C pays B for it.
Afterwards B supplies C with tea to the value of 200. C fails to pay. The guarantee given by A
was a continuing guarantee, and he is accordingly liable to B to the extent of 100.
(c) A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to
be paid for in a month. B delivers five sacks to C. C pays for them. Afterwards B delivers four
sacks to C, which C does not pay for. The guarantee given by A was not a continuing guarantee,
and accordingly he is not liable for the price of the four sacks.
Revocation of continuing guarantee.
130. A continuing guarantee may at any time be revoked by the surety, as to future transactions,
by notice to the creditor.
Illustrations
(a) A, in consideration of B's discounting, at A's request, bills of exchange for C, guarantees to
B, for twelve months, the due payment of all such bills to the extent of 5,000 Taka. B discounts
bills for C to the extent of 2,000 Taka. Afterwards, at the end of three months, A revokes the
27

guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A
is liable to B for the 2,000 Taka, on default of C.
(b) A guarantees to B, to the extent of 10,000 Taka, that C shall pay all the bills that B shall draw
upon him. B draws upon C. C accepts the bill. A gives notice of revocation. C dishonors the bill
at maturity. A is liable upon his guarantee.
Revocation of continuing guarantee by surety's death.
131. The death of the surety operates, in the absence of any contract to the contrary, as a
revocation of a continuing guarantee, so far as regards future transactions.
Liability of two persons, primarily liable, not affected by arrangement between them that
one shall be surety on other ' s default.
132. Where two persons contract with a third person to undertake a certain liability, and also
contract with each other that one of them shall be liable only on the default of the other, the third
person not being a party to such contract, the liability of each of such two persons to the third
person under the first contract is not affected by the existence of the second contract, although
such third person may have been aware of its existence.
Illustration
A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and
C knows this at the time when the note is made. The fact that A, to the knowledge of C, made
the note as surety for B, is no answer to a suit by C against A upon the note.
Discharge of surety by variance in terms of contract.
133. Any variance, made without surety's consent, in the terms of the contract between the
principal (debtor) and the creditor, discharges the surety as to transactions subsequent to the
variance.
Illustrations
(a) A becomes surety to C for B's conduct as a manager in C's bank. Afterwards, B and C
contract, without A's consent, that B's salary shall be raised, and that he shall become liable for
one-fourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a
sum of money. A is discharged from his suretyship by the variance made without his consent,
and is not liable to make good this loss.
(b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of
which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the
office is materially altered. Afterwards, B misconducts himself. A is discharged by the change
from future liability under his guarantee, though the misconduct of B is in respect of a duty not
affected by the later Act.
(c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A's becoming surety
to C for B's duly accounting for moneys received by him as such clerk. Afterwards, without A's
knowledge or consent, C and B agree that B should be paid by a commission on the goods sold
by him and not by a fixed salary. A is not liable for subsequent misconduct of B.
(d) A gives to C a continuing guarantee to the extent of 3,000 Taka for any oil supplied by C to B
on credit. Afterwards B becomes embarrassed, and, without the knowledge of A, B and C
contract that C shall continue to supply B with oil for ready money, and that the payments shall
be applied to the then existing debts between B and C. A is not liable on his guarantee for any
goods supplied after this new arrangement.
(e) C contracts to lend B 5,000 Taka on the 1st March. A guarantees repayment. C pays the
5,000 Taka to B on the 1st January. A is discharged from his liability, as the contract has been
varied, inasmuch as C might sue B for the money before the 1st March.

28

Discharge of surety by release or discharge of principal debtor.


134. The surety is discharged by any contract between the creditor and the principal debtor, by
which the principal debtor is released, or by any act or omission of the creditor, the legal
consequence of which is the discharge of the principal debtor.
Illustrations
.(a) A gives a guarantee to C for goods to be supplied by C to B.C supplies goods to B, and
afterwards B becomes embarrassed and contracts with his creditors (including C) to assign to
them his property in consideration of their releasing him from their demands. Here B is released
from his debt by the contract with C, and A is discharged from his suretyship.
(b) A contracts with B to grow a crop of indigo on A's land and to deliver it to B at a fixed rate,
and C guarantees A's performance of this contract. B diverts a stream of water which is
necessary for irrigation of A's land and thereby prevents him from raising the indigo. C is no
longer liable on his guarantee.
(c) A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying
the necessary timber. C guarantees A's performance of the contract. B omits to supply the
timber. C is discharged from his suretyship.
Discharge of surety when creditor compounds with , gives time to, or agrees not to sue,
principal debtor.
135. A contract between the creditor and the principal debtor, by which the creditor makes a
composition with, or promises to give time to, or not to sue, the principal debtor, discharges the
surety, unless the surety assents to such contract.
Surety not discharged when agreement made with third person to give time to principal
debtor.
136. Where a contract to give time to the principal debtor is made by the creditor with a third
person, and not with the principal debtor, the surety is not discharged.
Illustration
C, the holder of an overdue bill of exchange drawn by A as surety for B, and accepted by B,
contracts with M to give time to B. A is not discharged.
Creditor' s forbearance to sue does not discharge surety.
137. Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any
other remedy against him does not, in the absence of any provision in the guarantee to the
contrary, discharge the surety.
Illustration
B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for a year
after the debt has become payable. A is not discharged from his suretyship.
Release of one co-surety does not discharge others.
138. Where there are co-sureties, a release by the creditor of one of them does not discharge
the others; neither does it free the surety so released from his responsibility to the other
sureties.
Discharge of surety by creditor's act or omission impairing surety's eventual remedy.
139. If the creditor does any act which is inconsistent with the rights of the surety, or omits to do
any act which his duty to the surety requires him to do, and the eventual remedy of the surety
himself against the principal debtor is thereby impaired, the surety is discharged.
Illustrations
29

(a) B contracts to build a ship for C for a given sum, to be paid by installments as the work
reaches certain stages. A becomes surety to C for B's due performance of the contract. C,
without the knowledge of A, prepays to B the last two installments. A is discharged by this
prepayment.
(b) C lends money to B on the security of a joint and several promissory note made in C's favor
by B, and by A as surety for B, together with a bill of sale of B's furniture, which gives power to C
to sell the furniture, and apply the proceeds in discharge of the note. Subsequently, C sells the
furniture, but, owing to his misconduct and willful negligence, only a small price is realized. A is
discharged from liability on the note.
(c) A puts M as apprentice to B, and gives a guarantee to B for M's fidelity. B promises on his
part that he will, at least once a month, see that M make up the cash. B omits to see this done
as promised, and M embezzles. A is not liable to B on his guarantee.

Rights of surety on payment or performance.


140. Where a guaranteed debt has become due, or default of the principal debtor to perform a
guaranteed duty has taken place, the surety, upon payment or performance of all that he is
liable for, is invested with all the rights which the creditor had against the principal debtor.
Surety ' s right to benefit of creditor ' s securities.
141.A surety is entitled to the benefit of every security which the creditor has against the
principal debtor at the time when the contract of suretyship is entered into, whether the surety
knows of the existence of such security or not; and, if the creditor loses, or, without the consent
of the surety, parts with such security, the surety is discharged to the extent of the value of the
security.
Illustrations
(a) C advances to B, his tenant, 2,000 Taka on the guarantee of A. C has also a further security
for the 2,000 Taka by a mortgage of B's furniture. C cancels the mortgage. B becomes insolvent,
and C sues A on his guarantee. A is discharged from liability to the amount of the value of the
furniture.
(b) C, a creditor, whose advance to B is secured by a decree, receives also a guarantee for that
advance from A. C afterwards takes B's goods in execution under the decree, and then, without
the knowledge of A, withdraws the execution. A is discharged.
(c) A, as surety for B, makes a bond jointly with B to C, to secure a loan from C to B. Afterwards,
C obtains from B a further security for the same debt. Subsequently, C gives up the further
security. A is not discharged.
Guarantee obtained by misrepresentation invalid.
142. Any guarantee which has been obtained by means of misrepresentation made by the
creditor, or with his knowledge and assent, concerning a material part of the transaction, is
invalid.
Guarantee obtained by concealment invalid.
143. Any guarantee which the creditor has obtained by means of keeping silence as to material
circumstances is invalid.
Illustrations
(a) A engages B as a clerk to collect money for him, B fails to account for some of his receipts,
and A in consequence calls upon him to furnish security for his duly accounting. C gives his
guarantee for B's duly accounting. A does not acquaint C with B's previous conduct. B
afterwards makes default. The guarantee is invalid.
30

(b) A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B
and C have privately agreed that B should pay five Taka per ton beyond the market price, such
excess to be applied in liquidation of an old debt. This agreement is concealed from A. A is not
liable as a surety.
Guarantee on contract that creditor shall not act on it until co-surety joins.
144. Where a person gives a guarantee upon a contract that the creditor shall not act upon it
until another person has joined in it as co-surety, the guarantee is not valid if that other person
does not join.
Implied promise to indemnify surety.
145. In every contract of guarantee there is an implied promise by the principal debtor to
indemnify the surety; and the surety is entitled to recover from the principal debtor whatever
sum he has rightfully paid under the guarantee, but no sums which he has paid wrongfully.
Illustrations
(a) B is indebted to C, and A is surety for the debt. C demands payment from A, and on his
refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but
is compelled to pay the amount of the debt with costs. He can recover from B the amount paid
by him for costs, as well as the principal debt.
(b) C lends B a sum of money, and A, at the request of B, accepts a bill of exchange drawn by B
upon A to secure the amount. C, the holder of the bill, demands payment of it from A, and, on
A's refusal to pay, sues him upon the bill. A, not having reasonable grounds for so doing,
defends the suit, and has to pay the amount of the bill and costs. He can recover from B the
amount of the bill, but not the sum paid for costs, as there was no real ground for defending the
action.
(c) A guarantees to C, to the extent of 2,000 Taka, payment for rice to be supplied by C to B. C
supplies to B rice to a less amount than 2,000 Taka, but obtains from A payment of the sum of
2,000 Taka in respect of the rice supplied. A cannot recover from B more than the price of the
rice actually supplied.
Co-sureties liable to contribute equally.
146. Where two or more persons are co-sureties for the same debt or duty, either jointly or
severally, and whether under the same or different contracts, and whether with or without the
knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are
liable, as between themselves, to pay each an equal share of the whole debt or of that part of it
which remains unpaid by the principal debtor.
Illustrations
(a) A, B and C are sureties to D for the sum of 3,000 Taka lent to E. E makes default in
payment. A, B and C are liable, as between themselves, to pay 1,000 Taka each.
(b) A, B and C are sureties to D for the sum of 1,000 Taka lent to E, and there is a contract
between A, B and C that A is to be responsible to the extent of one-quarter, B to the extent of
one-quarter, and C to the extent of one-half. E makes default in payment. As between the
sureties, A is liable to pay 250 Taka, B 250 Taka, and C 500 Taka.
Liability of co-sureties bound in different sums.
147.Co-sureties who are bound in different sums are liable to pay equally as far as the limits of
their respective obligations permit.
Illustrations
(a) A, B and C, as sureties for D, enter into three several bonds, each in a different penalty,
namely, A in the penalty of 10,000 Taka, B in that of 20,000 Taka, C in that of 40,000 Taka,
31

conditioned for D's duly accounting to E. D makes default to the extent of 30,000 Taka. A, B and
C are each liable to pay 10,000 Taka.
(b) A, B and C, as sureties for D, enter into three several bonds, each in a different penalty,
namely, A in the penalty of 10,000 Taka, B in that of 20,000 Taka, C in that of 40,000 Taka,
conditioned for D's duly accounting to E. D makes default to the extent of 40,000 Taka; A is
liable to pay 10,000 Taka, and B and C 15,000 Taka each.
(c) A, B and C, as sureties for D, enter into three several bonds, each in a different penalty,
namely, A in the penalty of 10,000 Taka, B in that of 20,000 Taka, C in that of 40,000 Taka,
conditioned for D's duly accounting to E. D makes default to the extent of 70,000 Taka. A, B and
C have to pay each the full penalty of his bond.

32

Annex-3
Formats for Application by the Administrative Ministry/ Division to
the Finance Division for Approval of Guarantees / Counter Guarantees
Part-A: Administrative Ministry/ Division and General Information
(1)Administrative Ministry/ Division
(2) Guarantee or Counter Guarantee? Specify
(3) Domestic Loan or Foreign Loan? Specify
(4) Original or Extension? Specify
(5)Beneficiary/ Borrower/ Principal Debtor
(6)Name of Lender/ Creditor in case of Guarantees
(7)Name of Original Guarantor in case of Counter Guarantees
(8)Total Amount in Crore Taka in case of domestic loan
(9)Total Amount in Million US$ in case of external loan
(10)
Exchange rate used (Taka/ US$) in case of external loan
(11)
Period for which guarantee is being sought
(12) Purpose of guarantee/ counter guarantee
(13) Specific Class (refer to Notes for different Classes)
(14) Specific Sector (refer to Notes for different Sectors)
Notes:
(A) Class/ Category
(i)
(ii)
(iii)
(iv)
(v)

Guarantees/ Counter Guarantees given to the Bangladesh Bank;


Guarantees given to other banks and financial institutions;
Guarantees given to international financial institutions and foreign governments;
Guarantees given to foreign lending agencies, EXIM banks, contractors, consultancy
and management firms, and suppliers of goods, services, materials, turnkey projects,
plants, machinery and equipment etc.;
Others.

(B) Sector
(v) Agricultural credits
(vi) Bangladesh Petroleum Corporation
(vii)Trade / Procurement of Fertilizers, Sugar, Edible Oil, Pulses
(viii)
Other Sectors

33

Annex-3
Part-B: Terms and Conditions of Loan
1.
2.

Total amount (in crore taka)


Total Amount in Million US$ in case of
external loan

3.

Exchange rate used (Taka/ US$) in case of


external loan

4.
5.

Interest rate per annum


Penalty for defaults in repayment of
principal or interest payments, if any

6.

Terms and conditions for repayment and


debt services

7.

Repayment and debt service schedule (in


Crore Taka)
Date/Month/Year

Repayment of
Principal

Total

34

Payment of interest

Total

Part-C: Financial Performance of the Beneficiary/ Borrower/ Principal Debtor


General Information
1. Name of the Beneficiary/ Borrower/ Debtor
2. Credit Rating for the current fiscal year and the Rating Agency, if any
3. Major Activities

Table-C1: Financial Analysis during Current Year and Last Two Years (Crore Taka)
Major Indicator

Sub Indicators

Previous
Year

Last Year

Current year
(projected)

Total Assets (TA)


Current Assets (CA)
Total Equity (TE)
Current Liabilities (CL)
Current ratio (CA/ CL)
Quick ratio (CA-1/ CL)
Total turnover
Total expenditure
Taxes paid
Gross Profits
Return on assets (%)
Return on equity (%)
Return on turnover (%)
Capital Exp/ Total Expenditure
Capital Exp/ Total Assets
Debt to Assets Ratio
Debt to Equity Ratio
Dividend to Equity ratio
(Before taxation)
Dividend Payments/Net Income
(Before taxation)

1. Assets and
liabilities
(Crore BTK)
2. Liquidity
3. Turnover
and Profits
(Crore BTK)
4. Profitability
5. Capital
investment
6. Leverage
7. Dividend

Table-C2.1 Total Outstanding Guarantees/ Counter Guarantees


in Favor of the Beneficiary (Taka Crore)
No. of live
guarantees / CGs
issued as on date
(1)

Maximum amount
of individual
guarantee/ CG
received in
last 12 months
(2)

Invoked G/CG since


during last 12 months
Discharged
Not Discharged
(6)
(7)

Outstanding G/CG
in favor of the
beneficiary
a year ago

Additions of G/
CG received
during last 12
months

Deletions of G/CG
(other than
invoked) during
last 12 months

(3)

(4)

(5)

Outstanding G/CG
as on today
(8)

35

Guarantee Commission/ Fee


Receivable
(9)

Received
(10)

Table-C2.2 Borrowings: Loans Contracted During Last Three Years (Crore BTK)
(Give information for largest five Loans)
Lender
1
2
3
4
5
6

Loan Amount
(Crore BTK)

Date Contracted

Purpose

Terms

Others
TOTAL
Table-C2.3: Outstanding Debts (Crore BTK)

(Give information for largest five Debtors)


At the end of
Last Year

Debtor
1
2
3
4
5
6

At Present

Expiry Date

Others
TOTAL

Table-C2.4: Total Debt Services (Crore BTK)


Previous Year

Debt Services
1
2
3
4
5
6

Amortization
(Repayment of Principal)
Interest Payments
Total Debt Services (1+2)
Total Debt Services to Turnover Ratio
(%)
Total Debt Services to Total
Expenditure Ratio (%)
Total Debt Services to Gross Profits
Ratio (%)

Annex-3: Part-D
36

Last Year

At Present

Financial Performance of the Lender/ Original Guarantor (these information are


not required if the Bangladesh Bank is the Lender or the Original Guarantor)
General Information
1. Name of the Lender in case of Guarantees
2. Name of the Original Guarantor in case of Counter Guarantees
3. Credit Rating for the current fiscal year and the Rating Agency, if any
4. Major Activities

Table-D1: Financial Analysis during Current Year and Last Two Years
Major Indicator
1. Assets and
liabilities
(Crore BTK)
2. Liquidity
3. Turnover
and Profits
(Crore BTK)
4. Profitability
5. Capital
investment
6. Leverage
7. Dividend

Sub Indicators
Total Assets (TA)
Current Assets (CA)
Total Equity (TE)
Current Liabilities (CL)
Current ratio (CA/ CL)
Quick ratio (CA-1/ CL)
Total turnover
Total expenditure
Taxes paid
Gross Profits
Return on assets
Return on equity
Return on turnover
Capital Exp/ Total Expenditure
Capital Exp/ Total Assets
Debt to Assets Ratio
Debt to Equity Ratio
Dividend to Equity ratio
(before taxation)
Dividend Payments/Net Income
(before taxation)

Previous
Year

Last Year

Current year
(projected)

Table-D2.1 Total Outstanding Guarantees/ CGs Issued (Taka Crore)


No. of live G/CGs
Issued as on date

Maximum amount
of individual
guarantee/ CG

Outstanding G/CG
at the end of
last year

Additions of G/
CG issued during
current year

(1)

(2)

(3)

(4)

Invoked G/CG during current year


Discharged
(6)

Not Discharged
(7)

Outstanding G/
CG as on today
(8)
Table-D3
37

Deletions of G/CG
(other than
invoked) during
current year
(5)

Guarantee Commission/ Fee


Receivable
(9)

Received
(10)

Additional Financial Information for Banks/ Financial Institutions


Sl.
No
.
1
2
3

Indicators

9
10
11

Total Assets
Total equity
Total outstanding borrowings
Domestic borrowings
External borrowings
Credits provided during the year
Agriculture credits
Petroleum sector
Trade credits
Others
Outstanding Credits at the end of year
Agriculture credits
Petroleum sector
Trade credits
Others
Guarantees provided during the year
To public sector
To private sector
Outstanding Guarantees at year end
To public sector
To private sector
Total deposits
Deposits by residents
Deposits by non-residents
Gross profits
Net profits
Return on equity

12

Return on assets

13

Non-performing assets

14

Agriculture sector
Petroleum sector
Trade credits
Others
NPA ratio

15

Capital adequacy ratio

Unit
Crore TK
Crore TK
Crore TK
Crore TK
Crore TK
Crore TK

Crore TK

Crore TK

Crore TK

Crore TK
Crore TK
Crore TK
Crore TK
Percentag
e
Percentag
e
Percentag
e

Percentag
e
Percentag
e

38

2010-11

2011-12

2012-13

39

1.
2.
3.
4.
5.
6.
7.
8.
9.
.
.
.
.
.
.
.
.
.
.
.
.

Annex-4
Format for Collecting Quarterly Information on Guarantees (G)
and Counter Guarantees (CG) from SOEs, Banks and Other Beneficiaries
For each Guarantee/ Counter Guarantee, build data base on the following information relating to
guarantees and counter-guarantees at the end of each quarter in the fiscal year.
Financial Year ------------------------------------Quarter Ending --------------------------------Class/ Category (see classification) -----------------------------------------------Sector (see classification): ___________________________________
FD Reference No. for the issue of guarantees and counter guarantees
Guarantee or counter-guarantee (specify)
Purpose of guarantee/ counter-guarantees
Amount in USD (million)
Exchange rate (BTK per US$)
Amount in BTK (crore)
Date of original Issue
Date of extension
Expiry date
Beneficiary entity
Guarantee/ counter-guarantee in favor of
In case of counter-guarantee, name the original Guarantors
Outstanding guarantee/ CG as on the end of previous quarter(Crore BTK)
Additions during the Quarter (crore BTK)
Deletions other than invoked during the Quarter (crore BTK)
Invoked and discharged during the Quarter (crore BTK)
Invoked, but not discharged, during the Quarter (crore BTK)
Outstanding at the end of the current Quarter (crore BTK)
Guarantee commission fee received (lakh BTK)
Guarantee commission fee receivable (lakh BTK)
Other material information, if any

40

Annex-5
Formats for Class-Wise and Sector-Wise Disclosure
in the Financial Statements of the Ministry of Finance
Line Ministry/ Division -----------------------------------------------A. Class-Wise Details: For Guarantees (G)/ Counter Guarantees (CG) (Taka Crore)
Class (No. of
G / CG within
brackets)
(1)

Maximum amount
of individual G/
CG during the
year
(2)

Invoked G/CG
during the year
Discharged
(6)

Not Discharged
(7)

Outstanding G/CG
at the beginning
of the year

Additions of G/
CG during the
year

(3)

(4)

Outstanding G/CG
at the end of the
year
(8)

Deletions of G/CG
(other than
invoked)
during the year
(5)

Guarantee Commission/ Fee


Receivable
(9)

Received
(10)

A. Sector-Wise Details: For Guarantees/ Counter Guarantees (Taka Crore)


Class (No. of
G / CG within
brackets)
(1)

Maximum amount
of individual G/
CG during the
year
(2)

Invoked G/CG
during the year
Discharged
(6)

Not Discharged
(7)

Outstanding G/CG
at the beginning
of the year

Additions of G/
CG during the
year

(3)

(4)

Outstanding G/CG
at the end of the
year
(8)

Deletions of G/CG
(other than
invoked)
during the year
(5)

Guarantee Commission/ Fee


Receivable
(9)

Received
(10)

Note: Different Classes and sectors of Guarantees/ Counter Guarantees have been defined
in the text (see Section-7).

41