Loans and Advances to Public and Quasi-Public Bodies

The sanction letters received in the Loans section are scrutinized with reference to the Budget Provision and entered in the Subsidiary Loan Register (SLR). When the vouchers are received with Treasury accounts, the voucher number will be noted in the SLR in confirmation of the amount drawn. Repayment is made by the loanee through Treasury chalans, which are posted in the SLR. Issue of necessary demand notice by this Office for each individual recovery is compulsory.  If the sanctions issued by Government are not received in respect of all cases, the number and date of the sanctions attached with the vouchers are noted in the SLR at the time of posting of vouchers.  

a) Sanction details and terms and conditions are noted in the Subsidiary Loan Register (SLR).In addition to the normal terms and conditions of loan, if “equated annual instalments’, are prescribed, annuity is to be fixed as per the table prescribed.  In these cases principal together with interest should not exceed the fixed annuity amount. Rate of interest, if available, in the sanction may be incorporated in the SLR .  If it is not available, the same may be obtained and incorporated.

b) On receipt of Treasury vouchers of withdrawal by Loan Section, payment particulars are also noted in SLR against the corresponding sanction order.

c) Demand Notices are to be prepared and sent to the loanee concerned.

d) Recovery chalans when received in Loans Section are noted in the SLR and balance of each loan is worked out.

e)Broadsheets of loan are maintained with reference to Debits and Credits.

f)Noting of Utilisation Certificate against each loan on receipt of the same from loanee.

g) Annual statement of balances of loans/default statement for non-payment of dues are prepared and conveyed to the loanee as well as the loan sanctioning Department/Government.

h) Loan balances are to be reconciled with the Department /Loanee concerned and acceptances are also attached.

i) In case of recovery made by chalans in triplicate, one copy is retained by Treasury, 2nd copy is sent to the Institution and the third copy is sent to this Office. But some Institutions send their copy to A.G’s office in advance for noting in SLR.  After noting, the chalan is to be returned to the institution. Copy of the chalan received from the institution is to be used only for reference purposes.  In the SLR, recovery of loan through chalans should be incorporated based on the accounts received from the Treasury only. If a chalan is missing, the same will be called for from the treasury based on the details of the chalan received from the institution.

j) Any misclassification made by treasury /institution is rectified by proposing T.Es.

k) The loans fall under the following Heads of Accounts:-

  • 6217 (except 6217-60-190-99)
  • 6215
  • 6515-101-93, 96, 97, 99
  • 6202-01-203-96, 97, 98
  • 6216-80-201-99 (02 &06)
  • 6225-01-800-93(33)
  • 6801
  • 7055
  • 7056
  • 7615-200-00

If the remittances are not made by the Loanee by the due date, penal interest is to be levied vide Art.234 of K.F.C.Vol.1, as amended from time to time.

Statement of default and expenditure during a month will be sent to Government (Finance Dept) by the 10th of the next month.  Half yearly statement of arrears pending collection will be intimated to Finance Department on 30the April and 30th October every year.

Loans & Advances to Government employees


The Departmental authorities forward copy of sanction orders to this office when they have sanctioned HBA/MCA/PCA to their employees.  On receipt of the sanction order, this office allots a New Broad Sheet Number to each loanee and admission intimation report are forwarded to the concerned Department and loanee.

Drawal of Advances

It should be scrutinised

  • That the amount claimed/drawn is in accordance with the sanction
  • That the certificate to the effect that the security bond and other document referred to in the sanction for the advance have been received by the Departmental Officer or other Competent Authority and
  • That the bill has been signed/countersigned by the Authority, empowered under the rules or in terms of the sanction.


Recovery from the salary bills of the State Government employees are transfer credited by the treasuries to the following Heads of Account:

HBA 7610-00-201-98-00
MCA 7610-00-202-99-00
Interest on HBA 0049-04-800-93-01
Interest on MCA 0049-04-800-93-02
HBA to All India Service 7610-00-201-99-00 
Personal Computer Advance to State Service 7610-00-204-98-00
Personal Computer Advance to AIS Officer 7610-00-204-99-00

Sometimes, instead of effecting recovery from the salary, the monthly instalments are credited to Government Account through chalans by the loanees themselves or by others like foreign employers.  The original schedules/chalans are forwarded by the Treasuries to the Accountant General (A&E) along with covering lists as input material for the purpose of accounting.

Payment of interest

On completion of recovery of principal, the interest due on the advance shall be worked out and intimated by the Accountant General to the Department and the Officer.  If for any reason, interest due cannot be worked out finally, recovery should be made provisionally at the rate fixed for the recovery of the principal.  Interest shall be calculated on the monthly balance at the rate prescribed by Government from time to time.  The rate to be applied will be that prevalent on the date in which the advance was drawn.

Penal Interest

Article 244 D(2) of KFC Vol. 1 provides that penal interest@2.5% over and above the normal rate of interest will be levied in respect of over-due instalments of principal and interest outstanding from time to time if there is any default, violation or breach of the provisions contained in the rules.   Instances of such default, violation etc. are:-

  • Retention of the loan amount by the loanee beyond the normal admissible period
  • Retention of sale proceeds of house site or site with house beyond the normal admissible period.
  • Non utilisation of loan for the purpose for which it was sanctioned, even when the loan is repaid to Government in lump within the normal permissible date.
  • Delay in the execution of the mortgage bond after purchase of house site/house and site.
  • Delay in the production of utilization certificate as well as completion certificate and
  • Non-compliance with the requirement of other rules relating to house construction advance.

Liability at the time of retirement

Normally repayment of advances together with interest should be completed before retirement of the loanee.  In case any balance remains to be recovered at the time of retirement, such amount should be remitted/recovered from the DCRG and credited to the concerned Head of Account.  In the case of Non-Gazetted Officers, the outstanding liabilities may be ascertained from the Accountant General and included in the Departmental Liability Certificate issued to the Treasury Officer for effecting adjustment from the DCRG.  The receipted chalan is to be forwarded to the AG for issuing Clearance Certificate in respect of the advance.  In the case of Gazetted Officers, the outstanding liabilities if any, will be adjusted by the AG and the adjustment Gratuity Payment Order will be issued to the Treasury Officer under intimation to the loanee.  As such, Departmental Liability/Non liability Certificate is not to be held-up in the case of Gazetted Officers for want of Clearance Certificate.  Position of Long-Term Advances should be noted in the Pension Book forwarded to AG, to avoid unnecessary delay in the issue of NLC and release of DCRG by AG’s Office.

Premature Closure of loan accounts

Loanees can make lump sum chalan remittances to close their loan accounts prematurely.  As it may take some time to receive such chalans from the Treasury in AG’s Office, the loanees have to produce a certificate from the Treasury for issuing Clearance Certificate.  However, with a view to avoid hardship to the loanees, Clearance Certificate is being issued now on production of a Declaration.

Closing of Loan Accounts of officers dying in harnes

As a measure of compassion, the State Government have decided to write off/waive the outstanding liabilities in the case of Government employees whose remittances were made without default while they were in service.  This is subject to certain conditions as mentioned below:-

  • Amount written off/waived will be limited to Rupees 5 lakhs.
  • If the total liability exceeds Rupees 5 lakhs, priority for write off/waive will be given first to the Interest Free Medical Advance for medical treatment, then to the interest on HBA/MCA and balance to the Principal portion of HBA/MCA.
  • In the case of joint loan, when one party dies, the case will be considered individually at Government level.
  • The applicant should furnish along with the application for write off, an affidavit duly certified by a Notary Public of the locality to the effect that the advance (HBA/MCA/Medical treatment) has been fully utilized for the purpose for which it was sanctioned.
  • Personal Computer Advance outstanding at the time of death of Government servant also has been brought under the scheme by the issue of GO (P) 11/03/Fin dated 6.1.2003.