Loans and sinking funds

(1) Panchayati Raj Institution may, subject to the provisions of any law relating to the raising of loans by local authority for the time being in force, raise from time to time with the approval of the State Government loans for the purposes of this Act and create a sinking fund for the repayment of such loans.

(2) A Panchayati Raj Institution may borrow money from the Government or, with the previous sanction of the Government, from Banks or other financial institutions, for furtherance of its objectives on the basis of specific schemes drawn up by such Panchayati Raj Institution for the purpose.