Section 7(2) in The State Financial Corporations Act, 1951

Central Government Act

(2) The Financial Corporation may, for the purposes of carrying out its functions under this Act, borrow money from the Reserve Bank--

(a) repayable on demand or on the expiry of a fixed period not exceeding ninety days from the date on which the money is so borrowed against the security of--

(i) stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India, or

(ii) such bills of exchange and promissory notes as are eligible for purchase or rediscount by the Reserve Bank or as are fully guaranteed as to the repayment of the principal and payment of interest by a State Government;

(b) repayable on the expiry of a fixed period not exceeding eighteen months from the date on which the money is so borrowed, against securities of the Central Government or of any State Government of any maturity, 4[ or subject to the previous approval of the State Government, against bonds and debentures issued by the Financial Corporation] and maturing within a period not exceeding eighteen months from the date on which the money is so borrowed 6[ and every such bond and debenture shall be guaranteed by the State Government]:

1. Subs. by Act 6 of 1962, s. 5, for ss. 7 and 8 (w. e. f. 16- 4- 1962 ). 2. Ins. by Act 52 of 1975, s. 29 (w. e. f. 16- 2- 1976 ). 3. Subs. by Act 43 of 1985, s. 7. 4. Subs. by Act 77 of 1972, s. 5, for certain words. 5. Omitted by Act 43 of 1985, s. 7. 6. Ins. by Act 77 of 1972, s. 5.

Provided that the amount borrowed by the Financial Corporation under clause (b) shall not at any time exceed in the aggregate 1[ twice] the paid- up share capital thereof.