(1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be established for the purposes of this Act, a special Fund to be called the "National Compensatory Afforestation Fund" under the public account of India.
     (2) The National Fund shall be under the control of the Central Government and managed by the National Authority in such manner as may be prescribed.
     (3) On the date of establishment of the National Fund, all monies collected by the State Governments and Union territory Administrations which has been placed under the ad hoc Authority and deposited in the nationalised banks shall be transferred to the National Fund.
     (4) There shall also be credited into the National Fund, by each State on yearly basis, ten per cent. of the funds realised from the user agencies in respect of the forest land diverted in their favour, which have been credited directly into the State Fund.
     (5) There shall also be credited to the National Fund—
         (a) grants-in-aid received, if any, by the National Authority;
         (b) any loan taken or any borrowings made by the National Authority;
         (c) any other sums received by the National Authority by way of benefaction, gift or donations.
     (6) The monies received in the National Fund shall be an interest bearing fund under public accounts of India.
     (7) The balance in the National Fund shall be non-lapsable and get interest as per the rate declared by the Central Government on year to year basis.