16. Investment, lending and borrowing
16. Investment, lending and borrowing
(1) No Government servant shall speculate in any stock, share or other investment:
Provided that nothing in this sub-rule shall apply to occasional investments made through stock brokers or other persons duly authorised and licensed or who have obtained a certificate of registration under the relevant law.
Explanation - Frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.
(2)
(i) No Government servant shall make, or permit any member of his family or any person acting on his behalf to make, any investment which is likely to embarrass or influence him in the discharge of his official duties. For this purpose, any purchase of shares out of the quotas reserved for Directors of Companies or their friends and associates shall be deemed to be an investment which is likely to embarrass the Government servant.
(ii) No Government servant who is involved in the decision making process of fixation of price of an Initial Public Offering or Follow-up Public Offering of shares of a Central Public Sector Enterprise shall apply, either himself or through any member of his family or through any other person acting on his behalf, for allotment of shares in the Initial Public Offerings or Follow-up Public Offerings of such Central Public Sector Enterprise.
(3) If any question arises whether any transaction is of the nature referred to in sub-rule (1) or sub-rule(2), the decision of the Government thereon shall be final.
(4)
(i) No Government servant shall, save in the ordinary course of business with a bank or a public limited company, either himself or through any member of his family or any other person acting on his behalf, -
(a) lend or borrow or deposit money, as a principal or an agent, to, or from or with, any person or firm or private limited company within the local limits of his authority or with whom he is likely to have official dealings or otherwise place himself under any pecuniary obligation to such person or firm or private limited company; or
(b) lend money to any person at interest or in a manner whereby return in money or in kind is charged or paid:
Provided that a Government servant may give to, or accept from, a relative or a personal friend a purely temporary loan of a small amount free of interest, or operate credit account with a bona fide tradesman or make an advance of pay to his private employee:
Provided further that nothing in this sub-rule shall apply in respect of any transaction entered into by a Government servant with the previous sanction of the Government.
(ii) When a Government servant is appointed or transferred to a post of such nature as would involve him in the breach of any of the provisions of sub-rule (2) or sub-rule (4), he shall forthwith report the circumstances to the prescribed authority and shall thereafter act in accordance with such order as may be made by such authority.
Government of India Decisions
(1) Wherever any rule stipulates the obtaining of prior permission from Government in any matter, such prior sanction must invariably be obtained by Government servants before making any move, requests for ex-post-facto sanction to be severely discouraged.
Attention is invited to the provisions of rule 14(3) (now Rule 16 (4) and 15 (now Rule 18) of the Central Civil Services (Conduct) Rules, 1955, in which it has been stated that Government servants should not lend money to any person possessing land or valuable property within the local limits of their authority or at interest to any person and that they should not acquire or dispose of any immovable/movable property without the previous sanction of the prescribed authority. Instances have come to the notice of the Government where certain Government servants have entered into transactions regarding movable and immovable property without the previous sanction of the prescribed authority and they have afterwards sought ex-post-facto sanction. Such a procedure renders the provisions of the rules completely ineffective and defeats the purpose for which the rules have been framed. The Ministry of Finance etc., are, therefore, requested to impress upon the Government servants concerned the need to adhere to the provisions of the rules strictly and to obtain the sanction of the prescribed authority, wherever necessary, before entering into such transactions.
2. These instructions will apply, mutatis mutandis, to the provisions of the other rules which require previous knowledge, consent or sanction of the prescribed authority.
[MHA OM No. 25/25/61-Estt. (A), dated 26.06.1961]
Senior Officers cautioned not to approach their subordinates for standing surety for loans taken by them or by their relatives.
The Ministry of Home Affairs have examined the question whether it would be proper for Government servants to stand surety for loans taken from private sources by their official superiors. Where a Government servant stands surety for loans taken by his official superiors or their friends or relatives, it might create an impression that official pressure has been exerted for this purpose. Apart from this, the superior officer will be putting himself under obligation to the subordinate and such a situation is not conducive to efficient office management and maintenance of discipline. It has, therefore, been decided that all officers should be advised not to approach their subordinates for standing surety for loans taken from private sources either by them or by their relatives or friends.
[MHA OM No. 25/5/66-Ests.(A), dated 25.05.1966]
(3) Purchasing shares out of the quotas reserved for the friends and associates of Directors of Companies not allowed
A Question has been raised whether Government servants can purchase shares of Companies out of the quotas reserved for the friends and associates of the Directors of Companies. The provisions of Rule 16 (2) make it clear beyond doubt that a Government servant should be circumspect in the matter of making investment and there is room for the inference that purchase of shares in a Company out of the quota reserved for friends and associates of Directors is likely to embarrass him in the discharge of his official duties at some time or other. In the circumstances, keeping in view the provisions of Rule 16 (2), Government servants should not purchase shares out of the quota reserved for friends and associates of Directors of Companies.
[C.S. Deptt. of Personnel, No. 25/9/72-Ests.(A), dated the 18th September, 1976]
(4) Fixed Deposits with Banks and Companies
1. Fixed Deposits with public limited companies, whether in the private sector or the public sector, will be covered by the saving clause in the Rule 16 (4) of the CCS (Conduct) Rule, 1964 as public limited companies receive deposits from the public on authorization given by the Government under the Companies (Acceptance of deposit from the public) Rules, 1975. However, where the amount of deposit with a public limited company exceeds the monetary limits laid down in Rule 18 (3) of the CCS (Conduct) Rules, 1964, then a report to prescribed authority in regard to the deposit will be necessary under that rule.
2. Deposits with private limited companies and firms are in the nature of loans to these companies and firms and they should be regulated with reference to the provisions of Rule 16 (4) of the CCS (Conduct) Rules, 1964.
3. Fixed Deposits with Bank are, as already provided in Rule 16 (4) of the CCS (Conduct) Rules, 1964, exempted from the operation of this rule. However, in regard to Fixed Deposits with Bank also, a report should be made to the prescribed authority under Rule 18 (3) of the CCS (Conduct) Rules, 1964, if the monetary limit laid down therein are exceeded. The clarification contained in para 4 of this Department Office Memorandum No. 11013/12/76-Ests.(A) dated 04.10.1976 will stand modified to this extents.
[D.P. & A.R.’s OM No. 11013/5/81-Estt. (A), dated 12.05.1982]