Section 12 of The Rehabilitation Finance Administration Act, 1948
1[12. Business of the Administration.—The Administration may—
- (a)subject to the provisions of section 13, advance loans;
- (b)guarantee, on such terms and conditions as may be agreed upon, losses which a scheduled bank may suffer in respect of any loan advanced by it and approved by the Administration: Provided that the total amount which may be guaranteed in respect of any scheduled bank and the terms and conditions on which such guarantee may be given shall be subject to the prior approval of the Central Government: Provided further that the maximum liability of the Administration under such guarantee shall not exceed the amount for the time being available under clause (b) of sub-section (1) of section 11;
- (c)do all such acts and things as may be incidental to or consequential upon the performance of its functions under this Act including the running of the Administration.
Summary
- The Administration handles the business of advancing loans.
- It can also guarantee losses that scheduled banks might suffer on approved loans.
- To guarantee a loan, the total amount and the conditions must first be approved by the Central Government.
- The total liability for these guarantees cannot exceed the specific amount available in the special bank guarantee fund.
- The Administration is allowed to do all everyday tasks needed to run its operations smoothly.
Practical examples
FAQ
1. Can the Administration give loans directly to people?
Yes, it can advance loans directly as part of its main business.
2. Does the Administration guarantee any bank loan?
No, it only guarantees loans made by scheduled banks that are approved by the Administration, with prior approval from the Central Government.
3. Is there a limit on how much the Administration can guarantee?
Yes, the maximum liability for guarantees cannot be higher than the specific amount available under Section 11 for that purpose.
Test yourself
Q1.Under Section 12 of The Rehabilitation Finance Administration Act, 1948, what type of bank can have its loan losses guaranteed by the Administration?
Q2.According to Section 12 of The Rehabilitation Finance Administration Act, 1948, whose prior approval is needed before guaranteeing a bank's losses?
Q3.Section 12 of The Rehabilitation Finance Administration Act, 1948, states the maximum liability for bank guarantees cannot exceed the amount available under Section 11. According to Section 11 of The Rehabilitation Finance Administration Act, 1948, what is the maximum amount initially allowed for these guarantees?
Q4.Section 12 of The Rehabilitation Finance Administration Act, 1948, permits advancing loans subject to Section 13. Under Section 13 of The Rehabilitation Finance Administration Act, 1948, what is the maximum period allowed for such a loan?
Q5.Under Section 12 of The Rehabilitation Finance Administration Act, 1948, what general power does the Administration have to keep its offices running?