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 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). S. 8 of the Kerala Local Authorities Loans Act, 1963 requiries 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.