Security for repayment of loans

(1) When an application for loan has been sanctioned, the applicant shall execute a bond in the prescribed form undertaking to apply the money lent to the purpose or purposes for which, and to fulfil the conditions on which, the loan has been sanctioned. (2) For the loan so sanctioned, the applicant shall furnish one surety; and the person and property of the applicant as well as of the surety shall be liable for the repayment of the loan and costs, if any, incurred in making or recovering the loan: Provided that the Controlling Authority may in any case exempt the applicant, from furnishing a surety.