Maintenance and application of sinking fund.

(1) Whenever the repayment of a loan from a sinking fund has been sanctioned under proviso (ii) to sub-section (1) of section 109, the Corporation shall establish such a fund and shall pay into it, on such dates as may have been approved under the said proviso, such sum as will, with accumulations of compound interest, be sufficient after payment of all expenses to pay off the loan within the period approved: Provided that if at any time the sum standing to the credit of the sinking fund established for the repayment of any loan is of such amount that is allowed to accumulate at compound interest it will be sufficient to repay the loan within the period approved, then with the permission of the 1[State] Government further payments into such fund may be discontinued. (2) The Corporation may apply a sinking fund, or any part therof, in or towards the discharge of the loan for which such funds was established and, until such loan or part is wholly discharged, shall not apply the same for any other purpose.