A Reserve Bank working group has suggested that state governments should charge a minimum fee for guarantees extended by them on loans taken by their enterprises, local bodies, and cooperative institutions. Keeping in view the inherent risks associated with the guarantees extended by the state governments on their fiscal health and to the banking system, it was decided during the 32nd Conference of the State Finance Secretaries held in July 2022 to set up a Working Group, the RBI said in a statement on Tuesday. The Reserve Bank has released the 'Report of Working Group on State Government Guarantees' on its website. State governments are often required to sanction, and issue, on behalf of various state enterprises, cooperative institutions, urban local bodies, and other state-owned entities, guarantees in favour of their lenders which are generally commercial banks or other financial institutions. There is a specific ceiling of 0.5 per cent of GDP for additional guarantees to be ..