Provided that a sinking fund need not in the absence of any stipulation to that effect be established in the case of loans taken from the '[State Government.

Investment of sinking fund

1. (1) All sums paid into the sinking fund shall be invested in the promissory notes and other securities of the '[Central or the State Government] or in Port Trust Securities and all interest and other profits derived from such investments shall be applied to the sinking fund.
2. (2) The Board may apply the whole or any part of the sums accumulated in the sinking fund in or towards the discharge of the moneys for the repayment of which the fund has been established, provided that it pays into the fund in each year, and accumulates until the whole of the moneys borrowed are discharged, a sum equivalent to the interest which would have been produced by the sinking fund, or the part of the sinking fund so applied.