Panchayat:Repo18/vol2-page0285

19. Interest on Government loans.-(1) In the case of Government loans interest shall be charged, at the rate agreed upon yearly or half-yearly, as the Government may determine and shall be reckoned and paid on each instalment from the date on which such instalment is received by the local authority.

(2) The Government may, if they think fit, direct that compound interest at a rate not less than 7% per cent per annum shall be paid upon all overdue instalments of interest or principal and interest.

20. Repayment of Government loans.- The local authority may, at any time, repay the whole or any part of a Government loan in advance of the period fixed by the conditions of the loan.

21 Accounts of Government loans.-The accounts of every Government loan shall be kept by the ACCountant General.

22. Sinking fund for non-Government loans.- If a loan is not repayable by annuities or annual drawings, the local authority shall establish a sinking fund in the following manner, namely:-
(1) it shall pay out of its income, yearly or half yearly into such fund, a sum which, accumulating at such rate of compound interest as the Government may fix, will be sufficient to secure the liquidation of the loan within the term fixed for its repayment;
(2) it shall make the first of such payments within one year from the date of taking or raising the loan unless the sanctioning authority otherwise directs, and
(3) it shall submit the accounts of its sinking fund annually to the Examiner of Local Fund Accounts and shall at once make good from its income any amount by which he may certify that the fund is deficient, unless the Government sanctions gradual readjustment.

Explanatory Note

(This note is not part of these Rules but is intended to indicate their general purport).
Section 8 of the Kerala local Authorities Loans Act, 1963 requires that the Government may, by notification in the Gazette make rules to carry out the purposes of the Act. The above rules are intended to regulate the raising of loans by Local Authorities.

APPENDIX I

Application for loan

(See Rule 6)

1.Purpose of the loan.
2. The amount proposed to be borrowed.
3. If the amount is for any remunerative work the probable return from the same per annum after its execution.
4. The fund or the portion of the fund on the security of which it is proposed to borrow.
5. The law under which the said fund is levied, received or held.
6. The date within which the money is to be borrowed.
7. The rate of interest at which the money is to be borrowed.
8. The term of years for which the money is to be borrowed and the method by which it is to be repaid.
9. Account of the financial position of the Municipality.

10. A statement of the prior loans outstanding, repayment and the method of their repayment

APPENDIX II

Application For Permission to Guarantee interest

(See Rule 7)

1. Purpose for which the payment of interest is to be guaranteed.
2. Cost of the work or the expenditure to be incurred for the purpose and probable amount as interest to be guaranteed.
3. Whether the interest is to be guaranteed severally or in conjunction with any other local authority.
4. If in conjunction with any other local authority, the name of the local authority concerned.

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