Municipal Fund

(1) All monies received by a municipality shall constitute a fund which shall be called the "Municipal Fund" and shall be applied, and disposed of, in accordance with the provisions of this Act and the rules made thereunder. (2) The receipts which shall be credited to the municipal fund shall include all grants, loans, advances or contributions made by the Government from time to time as may be considered necessary having regard to the recommendation of the Finance Commission, the needs for development and the cost of municipal administration and such other relevant factors as the Government may deem fit. (3) Where a municipality commits default in repayment of any loan or part of the loan due to the Government, such amount may be adjusted from out of the amount payable to the municipality by the Government by way of grant.