Provisions for guarantee fund to meet certain losses

(1) It shall be competent for the State Government to constitute one or more guarantee funds on such terms and conditions as it may deem fit, for the purpose of meeting losses that might arise as a result of loans being made by Agriculture and Rural Development Banks on titles to immovable property subsequently found to be defective or for any other purpose under this Act for which in the opinion of the State Government, it is necessary to provide for or create a separate guarantee fund. (2) The State Bank and the Primary Agriculture and Rural Development Banks shall contribute to such funds at such rate as may be prescribed, and the maintenance and utilisation of such funds shall be governed by such regulations as may be made by the Board in this behalf.