Issue of debentures by the Board

(1) With the previous sanction of the trustee and of the State Government, the State Bank may issue debentures of one or more denominations for such periods as it may deem expedient on the security of the Gehan or mortgage or hypothecation held or mortgages, charges or hypothecation partly held or partly to be acquired and other assets transferred or deemed under the provisions of section 38 to have been transferred by the Primary Agriculture and Rural Development Banks to the State Bank or on the security of all or any other assets and properties of the State Bank and also against the Gehan or mortgages or hypothecation which are to be acquired or have been deemed to be acquired by the State Bank. (2) Notwithstanding anything contained in sub-section (1), in respect of loans guaranteed by the Government and guaranteed to any person or to any body of persons, whether incorporated or not and whether or not established by or under any law for the time being in force, if such a body is approved by the Government, the Board may, with the prior permission of the trustees, issue debentures, on the strength of such Government guarantee and without the security of Gehan or mortgages or hypothecation and other assets, of one or more denominations, for such periods as it may deem expedient and subject to such conditions as the Government may think fit to impose.