(1) A Nagar Panchayat or a Council may, with the previous sanction of the State Government and subject to such conditions as may be prescribed as to security, the rate of interest and the repayment of principal and interest, borrow either from the State Government or any financial institution, any sum of money required or empowered to undertake under the provisions of this Act.
     (2) Nothing contained in sub-section (1) or the rules made thereunder shall apply to grants or loans or advance made to a Nagar Panchayat or to a Council by any department, office or authority of the State Government or by any local authority or by any other institution towards, and for the purpose of, the implementation, achievement and accomplishment of community development schemes and a Nagar Panchayat or a Council may accept any such grant or loan which shall be regulated and governed by the terms on which, and the conditions subject to which, the same is made or advanced.