Section 26 of The Road Transport Corporations Act, 1950
Borrowing powers.
1[26. Borrowing powers.--A Corporation may, with the previous approval of the State Government, borrow money for the purpose of raising its working capital or meeting any expenditure of a capital nature in the open market or from a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), a State Finance Corporation, established under section 3 of the State Financial Corporations Act, 1951 (63 of 1951), the Industrial Finance Corporation of India, established under section 3 of the Industrial Finance Corporation Act, 1948 (15 of 1948), the Industrial Development Bank of India, established under section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964), the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956), or any other financial institution providing credit which is subject to the control of the Reserve Bank of India.]
Summary
- The Corporation has the power to borrow money to fund its work.
- It needs approval from the State Government before it can borrow anything.
- Loans can be used for working capital, which is money for day-to-day operations, or capital expenditure, which is spending on big assets like buildings.
- It can borrow from the open market or specific financial institutions like the Reserve Bank of India-controlled banks.
- Listed sources include the Life Insurance Corporation of India and various Industrial Finance Corporations.
Practical examples
FAQ
1. Can a transport body take out a loan under Section 26 of The Road Transport Corporations Act, 1950?
Yes, Section 26 of the Road Transport Corporations Act, 1950 gives the Corporation the power to borrow money with the State Government's previous approval.
2. Where can a Corporation borrow money from under Section 26 of The Road Transport Corporations Act, 1950?
Under Section 26 of the Road Transport Corporations Act, 1950, they can borrow from the open market, state financial corporations, LIC, or banks controlled by the Reserve Bank of India.
3. What can the borrowed money be used for according to Section 26 of The Road Transport Corporations Act, 1950?
Section 26 of the Road Transport Corporations Act, 1950 allows borrowing for raising working capital or meeting capital expenditure, which means spending on long-term assets.
Test yourself
1.Under Section 26 of The Road Transport Corporations Act, 1950, whose approval is needed before borrowing?
2.Which of the following is NOT a listed source for borrowing under Section 26 of The Road Transport Corporations Act, 1950?
3.Under Section 26 of The Road Transport Corporations Act, 1950, "working capital" refers to money used for what?
4.Can a Corporation borrow money from the open market under Section 26 of The Road Transport Corporations Act, 1950?