Conformed Copy - C2394 - Family Welfare (Urban Slums) Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2394 IN Development Credit Agreement (Family Welfare (Urban Slums) Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated February 4, 1994 CREDIT NUMBER 2394 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 4, 1994, between INDIA, acting by its President (the Borrower), and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Project will be carried out by the Borrower and the States of Andhra Pradesh, Karnataka and West Bengal, and as part of such assistance, the Borrower will make available to the States of Andhra Pradesh, Karnataka and West Bengal, part of the proceeds of the Credit as provided in this Agreement; WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date between the Association and the States of Andhra Pradesh, Karnataka and West Bengal; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Andhra Pradesh" means the State of Andhra Pradesh, a State of India, and includes any successor thereto; (b) "Karnataka" means the State of Karnataka, a State of India, and includes any successor thereto; (c) "West Bengal" means the State of West Bengal, a State of India, and includes any successor thereto; (d) "Project Agreement" means the agreement between the Association and Andhra Pradesh, Karnataka and West Bengal, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (e) "Project State" means Andhra Pradesh, Karnataka or West Bengal; (f) "Delhi" means the Delhi Administration of the Union Territory of Delhi and includes any successor thereto; (g) "Designated City" means the municipal authority of Agra, Allahabad, Kanpur, Lucknow, Meerut, and Varanasi in the State of Uttar Pradesh, Aurangabad in the State of Maharashtra, Bhopal, Durg, Gwalior, Indore and Jabalpur in the State of Madhya Pradesh, Jaipur and Jodhpur in the State of Rajasthan and Patna in the State of Bihar or any other municipal authority designated by the Association at the request of the Borrower as a city eligible to participate in carrying out Part B of the Project; (h) "BCC" means the Bangalore City Corporation, a municipal corporation in Karnataka; (i) "CMDA" means the Calcutta Metropolitan Development Authority, a planning and development authority in West Bengal; (j) "MCH" means the Municipal Corporation of Hyderabad, a municipality in Hyderabad; (k) "Project Cities" means BCC, CMDA and MCH, collectively; (l) "MCD" means the Municipal Corporation of Delhi; (m) "NDMC" means the New Delhi Municipal Committee; (n) "FY" means the financial year which begins on April 1 each year and ends on March 31 of the following year; (o) "IEC" means Information, Education and Communication; (p) "PMP" means a Private Medical Practitioner; (q) "PVO" means a Private Voluntary Organization; (r) "Special Account" means the account referred in Section 2.02 (b) of this Agreement; Page 3 (s) "State" or "States" means a state or states, respectively, of India; (t) "URS" means the Urban Revamping Scheme of the Borrower for the delivery of family welfare services in the urban areas; (u) "UBSP" means the Urban Basic Services for the Poor Scheme of the Borrower for education and motivation of urban low- income communities to cater to their needs; and (v) "Project Area" means the areas in the jurisdiction of the Project Cities, and MCD and NDMC, in which activities under Part A of the Project will be carried out. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to fifty-seven million seven hundred thousand Special Drawing Rights (SDR 57,700,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in the Reserve Bank of India on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be June 30, 2001 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Page 4 Section 2.06. Commitment charges and service charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi- annual installments payable on each June 1 and December 1 commencing December 1, 2002 and ending June 1, 2027. Each installment to and including the installment payable on June 1, 2012 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) of such principal amount. (b) Whenever (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years, and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out or cause to be carried out: (i) activities under Part A of the Project through Delhi, and (ii) Part B of the Project through the respective States of eligible Designated Cities, with due diligence and efficiency and in conformity with appropriate administrative, financial, health and family welfare practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall cause the Project States to perform in accordance with the provisions of the Project Agreement, all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources necessary or appropriate to enable the Project States to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall make part of the proceeds of the Credit available to the Project States, in accordance with the Borrower's standard arrangements for developmental assistance to the States of India. Page 5 Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Section 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project or any Part thereof shall be carried out or caused to be carried out respectively, by the Project States pursuant to Section 2.03 of the Project Agreement. Section 3.04. For the purpose of carrying out Part B of the Project, the Borrower shall obtain from each State of the Designated Cities and furnish to the Association a Letter of Undertaking in a form and substance satisfactory to the Association which shall include, inter alia, the terms and conditions of their participation in the Project. Section 3.05. In carrying out activities under Part A of the Project, the provisions of the Implementation Program set forth in Schedule 2 to the Project Agreement shall equally apply to Delhi as to the Project States, and to MCD and NDMC as to the Project Cities. ARTICLE IV Financial and Other Covenants Section 4.01. (a) The Borrower shall ensure that Delhi and States of Designated Cities shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of Delhi and said States responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) cause the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each financial year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish or cause to be furnished to the Association, as soon as available, but in any case not later than nine months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish or cause to be furnished to the Association such other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Page 6 Association has received the audit report for the financial year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such financial year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. The Borrower shall ensure that volunteer workers participating in URS shall be eligible to receive payment of honoraria in respect of their work in the said Scheme. Section 4.03. The Borrower shall develop by June 30, 1994 a program of measures to improve compliance with its Child Marriage Restraint Act, 1929, as amended. Section 4.04. The Borrower shall (i) under arrangements satisfactory to the Association to be instituted by June 30, 1994, examine the issues relating to population growth, health and the environment for urban areas; (ii) undertake by January 31, 1995, a reassessment of the Urban Revamping Scheme and the norms for the Borrower to provide support for said Scheme; and (iii) discuss with the Association the results of such reassessment including the implementation of proposed action resulting from said reassessment. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) Any Project State shall have failed to perform any of its respective obligations under the Project Agreement; and (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that any Project State will be able to perform its respective obligations under the Project Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely that the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized or ratified by each Project State and is legally binding upon each Project State in accordance with its terms. Page 7 Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The obligations of the Borrower under Sec- tion 3.05 and 4.01 of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Director, Deputy Secretary or Under Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ N. Valluri Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ D. Joseph Wood Page 8 Regional Vice President South Asia SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) For Part A of the Project: (a) Civil works 11,400,000 90% (b) Equipment, 16,800,000 100% of foreign vehicles, expenditures, medicines, 100% of local furniture expenditures, IEC and maternal (ex-factory and child health cost) and 80% materials of local exp- enditures for for other items procured locally (c) Consultants, 8,000,000 100% PMPs and PVOs' services and training (d) Incremental 11,100,000 90% of local operating expenditures costs until March 31, 1995; and 65% thereafter Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (2) For Part B of the Project: (a) Consultants' services: 100% (i) for State of 1,400,000 Uttar Pradesh (ii) for State of 200,000 Maharashtra (iii) for State of 200,000 Bihar (iv) for State of 1,200,000 Madhya Pradesh (v) for State of 500,000 Rajasthan (b) Equipment, 100% of foreign vehicles and expenditures, furniture: 100% of local expenditures (ex-factory cost) and 80% of local expenditures for Page 9 other items procured locally (i) for State of 1,000,000 Uttar Pradesh (ii) for State of 200,000 Maharashtra (iii) for State of 200,000 Bihar (iv) for State of 800,000 Madhya Pradesh (v) for State of 300,000 Rajasthan (3) Unallocated 4,400,000 ___________ TOTAL 57,700,000 =========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; and (c) the term "Incremental Operating Costs" means the following costs: (i) salaries of additional staff appointed in order to carry out the Project; and (ii) honoraria of additional volunteer workers. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made (a) in respect of payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 400,000, may be made on account of payments made for expendi- tures before that date but after December 1, 1992; or (b) in respect of payments made for expenditures under Category (2) by any State until the Association has received the Letter of Undertaking referred to in Section 3.04 of this Agreement from such State. SCHEDULE 2 Description of the Project The objectives of the Project are to (a) reduce fertility among slum populations in selected urban areas; and (b) improve maternal and child health by reducing maternal and infant mortality rates among slum populations. The Project consists of the following parts, subject to such modifications as may be agreed upon between the Borrower and the Association from time to time: Part A: Activities in the Project Area (i) Expansion of Supply of Family Welfare Services Development and implementation, as part of the implementation of the National Urban Revamping Scheme, of an expanded and effective outreach program aimed at providing increased family welfare services to people living in slum areas, using, inter alia, female workers resident in slum communities and consisting inter alia of establishing and strengthening selected new and existing health centers, health posts, maternity homes and Expanded Special Outpatient Departments (ESOPD) as well as mobile health clinics. (ii) Improvement of Quality of Family Welfare Services Page 10 Improving the quality of family welfare services by (a) recruitment and training of adequate additional family welfare staff including medical officers, health workers, members of slum clearance boards as well as PMPs; (b) developing and implementing a continuing, systematic training program for such staff and PMPs; (c) recruitment and training of slum-dwellers as para-technical health workers for outreach programs; and (d) increasing the involvement of PVOs in training. (iii) Increasing the Demand for Family Welfare Services (a) Increasing the participation of urban slum communities in the design, implementation and supervision of family welfare services provided to people in slum areas including by recruitment of community-based health workers (in particular, female health workers), establishing community groups in each slum covered under the Project on the model developed in the Urban Basic Services for the Poor Scheme (UBSP), with responsibility to undertake a variety of health, family welfare, environmental sanitation, education and training activities; establishing a revolving fund to support activities of such community groups with special emphasis for supporting efforts directly managed and implemented by women's groups. (b) Increasing the involvement of PVOs in the delivery of family welfare services to slum communities through, inter alia, the expansion of on-going schemes of the Borrower in selected slums and the implementation of innovative schemes recommended by PVOs. (c) Increasing the involvement of PMPs in the delivery of family welfare services to slum populations by strengthening registered nursing homes and polyclinics operated by PMPs, provision of training to PMPs, engagement of PMPs for provision of family welfare services, and operation of selected public health centers by PMPs. (d) Carrying out an effective IEC program for family welfare services including establishing and strengthening IEC cells, increased use of the private sector, in particular PVOs, for the development of a new generation of more effective IEC materials, provision of increased emphasis to inter-personal communication as well as to increased use of temporary methods of contraception and increased birth spacing. (e) Increasing female education opportunities by provision of support to selected programs that support increased access to, and quality of education of, young women with particular emphasis on out of school female adolescents. (iv) Improving the Management of Family Welfare Programs Strengthening and expansion of the capabilities of the departments and agencies involved in carrying out the Project, including (a) establishing and strengthening as necessary IEC, training, reporting and accounting, management information system and monitoring capabilities; and (b) improving coordination of family welfare departments and agencies with other departments of each Project City, MCD and NDMC as well as with the respective Project State and Delhi, and the Borrower. (v) Increased Community Participation through Innovative Schemes Increasing the participation of people in designing, preparing and implementing family welfare programs through innovative schemes such as the provision of supplementary nutrition for pregnant and lactating mothers and infants, improved sanitation, women's education, anti-larval and anti-gastero-enteritis programs, as well as a study of Sexually Transmitted Diseases (STD), including innovative schemes developed by PVOs. Part B: Preparation of Future Projects in Designated Cities Page 11 Preparation and initial launch, by Designated Cities, of future family welfare projects to be carried out in such Designated Cities, including completion of beneficiary/community needs assess- ments, facility surveys, two-year construction plans including detailed designs and cost estimates, site selection and acquisition as required, detailed procurement plans and detailed proposals for Innovative Schemes; as well as establishment of appropriate institutional mechanisms for implementation and monitoring of Part B of the Project, including for community participation. * * * The Project is expected to be completed by December 31, 2000. SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) and (2) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $4,000,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. Page 12 All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (i) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) once the total unwithdrawn amount of the Credit allocated to the eligible Categories less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the respective General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account, for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement. Page 13