(1) A local authority may, subject to the prescribed conditions, borrow on the security of its funds or any portion thereof for any of the following purposes, namely:-
(i) the carrying out of any works which it is legally authorized to carry out,
(ii) the giving of relief and the establishment and maintenance of relief works in times of famine or scarcity,
(iii) the prevention of the outbreak or spread of any dangerous epidemic disease,
(iv) any measures which may be connected with or ancillary to any purposes specified in clauses (ii) and (iii), (v) the repayment of money previously borrowed in accordance with law:
Provided that nothing in clause (v) shall be deemed to empower a local authority to fix a period for the repayment of any money borrowed thereunder which, when the period fixed for the repayment of the money previously borrowed is taken into account, will exceed the maximum period fixed for the repayment of a loan by or under any enactment for the time being in force:
[Provided further that, in the case of loans other than loans made by the [appropriate Government], no amount exceeding twenty-five lakhs of rupees shall be borrowed unless the terms, including the date of flotation, of such loan have been approved by the [appropriate Government].]
(2) Nothing in this section shall be deemed to authorize any local authority-
(a) to borrow or spend money for any purpose for which, under the law for the time being in force, it is not authorized to apply its funds, or
(b) to borrow money by means of the issue of bills or promissory notes payable within any period not exceeding twelve months.