India - Mysore Agricultural Wholesale Markets Project : Credit 0378 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 378 IN Development Credit Agreement (Mysore Agricultural Wholesale Markets Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 CONFORMED COPY CREDIT NUMBER 378 IN Development Credit Agreement (Mysore Agricultural Wholesale Markets Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 9, 1973, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between the Association and the State of Mysore, acting by its Governor, (hereinafter called Mysore), Mysore has agreed to undertake certain obligations in respect of the carrying out of the Project; (C) By an agreement of even date herewith between the Association and the Agricultural Refinance Corporation (hereinafter called ARC), ARC has agreed to undertake certain obligations in respect of the carrying out of the Project; (D) By a subsidiary loan agreement to be entered into between the - Borrower and ARC, the proceeds of the Credit under Category I will be made available to ARC and ARC in turn will make the said proceeds available to the Participating Commercial Banks (as hereinafter defined) under a Refinance Agreement to be entered into between ARC and each Participating Commercial Bank; and (E) 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 hereinafter set forth. NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969. with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof 4 (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Section 5.01 is deleted; (b) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h); (c) in Section 2.01, the following paragraph is substituted for paragraph 5: "5. The term 'Borrower' means India, acting by its President." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Mysore" means the State of Mysore, a state of India, or any successor thereof. (b) "ARC" means Agricultural Refinance Corporation, a statutory corporation established and existing under the laws of the Borrower. (c) "PCB" means a Participating Commercial Bank, or any successor thereof. (d) "Participating Commercial Bank" means any scheduled bank organized under the laws of India and participating in the financing of Part A of the Project. (e) "SMD" means the Mysore State Agricultural Marketing Department. (f) "Act" means the Mysore Agricultural Produce Marketing (Regulation) Act of 1966 as amended to the date of this Agreement. (g) "Market Committee" means a Market Conmittee established pursuant to the provisions of the Act. (h) "SMB" means the Mysore State Agricultural Marketing Board provided for under the Act. (i) "market intermediary" means a wholesaler, wholesale-cum-commission agent, broker, commission agent, trader, cooperative, corporate or statutory body, 5 or other person licensed by a Market Committee to operate within a market included under Part A of the Project. (j) "PWD" means the Mysore Public Works Department. (k) "TPD" means the Mysore Town Planning Department. (1) "Mysore Agreement" means the agreement of even date herewith between the Association and Mysore, and all schedules thereto, as the same may be amended from time to time. (m) "Project Agreement" means the agreement of even date herewith between the Association and ARC, and all schedules thereto, as the same may be amended from time to time. (n) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursuant to Section 3.01 () of this A. eement, and all schedules thereto, if any, as the same may be amended from time to time. (o) "Refinance Agreement" means the agreement to be entered into between ARC and each PCB pursuant to Section 3.02(a) of this Agreement, and all schedules thereto, if any, as the same may be amended from time to time. (p) "Sub-loan" means a loan made or proposed to be made by a PCB to a Market Committee or market intermediary for purposes of carrying out Part A of the Project and to be financed out of the proceeds of the Credit. (q) "Category" means a category of the allocation of the proceeds of the Credit set forth in Schedule I to this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to eight million dollars ($8,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost 6 of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit under Category I shall be procured pursuant to the provisions set forth or referred to in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1979 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 17IX) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 15 and October 15 commencing April 15, 1983 and ending October 15, 2022, each installment to and including the installment payable on October 15, 1992 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland 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 shall carry out the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with sound financial, administrative, engineering and town planning practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. 7 (b) In order to assist Mysore in carrying out Parts B and C of the Project, the Borrower shall make available to Mysore the equivalent of the proceeds of the Credit under Category II. (c) The Borrower shall relend the proceeds of the Credit under Category I to ARC under a subsidiary loan agreement to be entered into between the Borrower and ARC under terms and conditions satisfactory to the Association, including, inter alia, those set forth in Schedule 4 to this Agreement, as such Schedule may be modified from time to time with the agreement of the Association. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof included in Schedule 4 to this Agreement. Section 3.02. (a) The Borrower shall cause ARC to enter into a refinance agreement with each PCB under terms and conditions satisfactory to the Association, including, inter alia, those set forth in Schedule 5 to this Agreement, as such Schedule may be modified from time to time with the agreement of the Association. (b) The Borrower shall cause ARC and each PCB to perform their respective obligations under each Refinance Agreement in accordance with the provisions therein set forth and to exercise their respective rights under such agreements in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable ARC and each PCB to perform such obligations, shall not take or permit to be taken any action which would prevent or interfere with such performance, and except as the Association shall otherwise agree, shall not take or concur in any action which would have the effect of amending, assigning, abrogating or waiving any Refinance Agreement or any provision thereof included in Schedule 5 to this Agreement. Section 3.03. The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable (i) Mysore to perform all of its obligations under the Mysore Agreement; and (ii) ARC to perform all of its obligations under the Project Agreement and the Subsidiary Loan Agreement; and shall not take or permit to be taken any action which might interfere with the performance of any such obligations of Mysore or ARC. 8 Section 3.04. (a) The Borrower shall insure, or cause to be insured, or make, or cause to bc made, adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.05. (a) The Borrower shall cause ARC and each PCB to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition. (b) The Borrower shall cause ARC and each PCB to: (i) establish and maintain separate accounts in respect of all funds disbursed and received on account of the Project; (ii) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (iii) furnish to the Association as soon as available, but in any case not later than four months and in the case of each PCB six months after the end of each such year, (A) certified copies of their financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iv) furnish to the Association such other information concerning their accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. ARTICLE IV Consultation, Information and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by Mysore of its obligations under the Mysore 9 Agreement, the performance by ARC of its obligations under the Project Agreement and the Subsidiary Loan Agreement, the performance by ARC and each PCB of their respective obligations under each Refinance Agreement, the administration, operations and financial condition of ARC and each PCB and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of ARC and each PCB and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement, the performance by Mysore of its obligations tinder the Mysore Agreement, the performance by ARC of its obligations under the Project Agreement and the Subsidiary Loan Agreement, and the performance by ARC and each PCB of their respective obligations under each Refinance Agreement. Section 4.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. 10 Section 5.02. The Development Credit Agreement, the Mysore Agreement, the Project Agreement, the Subsidiary Loan Agreement and each Refinance Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions or in Section 6.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable inimediately together with the service charges thereon and upon any such declaration suci- principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) Mysore shall have failed to perform any of its obligations under the Mysore Agreement. (b) ARC shall have failed to perform any of its obligations under the Project Agreement, the Subsidiary Loan Agreement or under any Refinance Agreement. (c) Any PCB shall have failed to perform any of its obligations under any Refinance Agreement. (d) ARC or any PCB shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC or any PCB or by others whereby any of the property of ARC or any PCB shall or may be distributed among its creditors. (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC, any PCB or SMD or for the suspension of its operations. (f) An extraordinary situation shall have arisen which shall make it improbable that (i) Mysore will be able to perform its obligations under the Mysore Agreement, or (ii) ARC will be able to perform its obligations under the Project Agreement or the Subsidiary Loan Agreement, or (iii) ARC or any PCB will be able to perform its obligations under any Refinance Agreement. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a), (b) or (c) of Section 6.02 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 and the defaulting party. (b) any event specified in paragraph (d) or (e) of Section 6.02 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) The Mysore Agreement has been duly executed and delivered on behalf of Mysore and has been duly authorized or ratified by all necessary governmental action. (b) The Project Agreement has been duly executed and delivered on behalf of ARC and has been duly authorized or ratified by all necessary corporate and governmental action. (c) The Subsidiary Loan Agreement has bcon duly executed and delivered on behalf of the Borrower and ARC and has been duly authorized or ratified by all necessary corporate and governmental action. 12 (d) Mysore has made available the personnel referred to in Section 2.06 of the Mysore Agreement. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Mysore Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Mysore, and constitutes a valid and binding obligation of Mysore in accordance with its terms. (b) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC, and constitutes a valid and binding obligation of ARC in accordance with its terms. (c) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARC, respectively, and constitutes a valid and binding obligation of the Borrower and ARC in accordance with its terms. Section 7.03. The date September 7, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 7.04. The obligations of the Borrower under Sections 3.05 and 4.02(a) of this Agreement and the provisions of paragraphs (d) and (e) of Section 6.02 of this Agreement and those of paragraph (b) of Section 6.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. Any Secretary, Additional Secretary or Joint Secretary to the Government of India in the Ministry of Finance of the Borrower or the Director/Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower, acting singly, is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: 13 For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s!/ Eric Gonsalves Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ I.P.M. Cargill Regional Vice President Asia 14 SCHEDULE I 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 amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Sub-loans 7,920,000 80% of total disbursed expenditures II. Training and 80,000 60% of total evaluation expenditures TOTAL 8,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency of any country other than the Borrower, (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by 15 the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes; and (c) any amounts included in Sub-loans to finance the purchase of land. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association, at the request of the Borrower, to any other Category; and (b) if the Association shall have reasonably determined that the procurement of any item in Category I is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Asso,:ation may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category I or II shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 16 SCHEDULE 2 Description of the Project The Project is a part of the Borrower's program to develop regulated agricultural wholesale markets throughout the territories of the Borrower, and consists of the following: Part A The development and operation by SMD, Market Committees and market intermediaries of regulated agricultural wholesale markets in Mysore, including construction and provision of, inter alia, required surveys and land preparation, access roads, auction platforms, fencing, buildings, traders' shops-cum-godowns, internal roadways and parking areas, utilities and equipment. Part B The training of (i) senior staff of SMD; (ii) market secretaries of Market Committees; and (iii) agricultural produce graders. Part C An economic evaluation of a sample (not less than six) of the markets included under Part A of the Project, to determine the economic impact of the Project and the changing pattern of marketing of agricultural products in Mysore. The development of the markets included under the Project is expected to be completed by December 31, 1978. 17 SCHEDULE 3 Procurement 1. Each market yard to be financed under Part A of the Project shall be designed according to its site requirements and commercial needs. On behalf of Market Committees, SMD shall prepare or cause to be prepared detailed drawings, specifications, tender documents and construction contracts and shall supervise or cause to be supervised construction works. 2. After approval by the PCB concerned and ARC, PWD shall under the general supervision of SMD call for bids through public tender following established procedures for governmental procurement in Mysore. After appropriate bid evaluation, PWD shall award contracts for construction. 3. Payments to successful bidders shall be approved by the appropriate engineer of PWD. 4. Designs and specifications of facilities for market intermediaries shall be approved by Market Committees and SMD. 5. Contracts for construction shall be furnished to the PCB concerned. 18 SCHEDULE 4 Terms and Conditions of Subsidiary Loan Agreement To ARC from the Borrower (a) Term: 15 years, including a grace period of up to three years; (b) Repayment terms: in annual installments; (c) Interest rate: 6% per annum on amounts withdrawn and outstanding, with 1/4% rebate for prompt repayment of principal and interest; and (d) Exchange risk: for the account of the Borrower. 19 SCHEDULE 5 Terms and Conditions of Refinance Agreements 1. Undertaking to carry out Project Each PCB shall undertake to carry out that portion of Part A of the Project for which it is required to make funds available under the Project, or cause said portion to be carried out, with due diligence and efficiency and in conformity with sound financial, administrative, engineering and town planning practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. 2. Refinance of Sub-loans (a) Amount: ARC shall refinance up to 82% of expenditures by each PCB for Sub-loans; (b) Repayment terms: to coincide, more or less, with expected repayments of Sub-loans; provided, however, that prepayment of Sub-loans shall require proportionate prepayment of amounts refinanced; (c) Interest rate: 6-1/2% per annum on amounts withdnwn and outstanding. 3. Terms of Sub-loans - Market Committees (a) Amount: PCBs shall finance up to and not more than 95% of the total investment cost of Market Committees. (b) Repayment terms: up to 15 years including 2, and exceptionally up to 3, years of grace; (c) Interest rate: 9% per annum on amounts withdrawn and outstanding; (d) Security: first lien on property or assets financed or other satisfactory security. 4. Terms of Sub-loans - Market Intermediaries (a) Amount: PCBs shall finance up to 75% of the total investment cost of market intermediaries, exclusive of cost of land; 20 (b) Repayment terms: up to 9 years including I year of grace; (c) Interest rate: 9% per annum on amounts withdrawn and outstanding; (d) Security: first lien on property or assets financed or other satisfactory security. 5. Restrictions - Market Committees Except as the Borrower, ARC and the Association shall otherwise agree, each PCB shall undertake to restrict, during the period any part of a Sub-loan to a Market Committee is outstanding, and subject to the requirements of the Act, the use by such Market Committee of its available funds as follows: (i) to the Market Committee's contributions to the SMB and SMD as prescribed under Chapter VIl of the Act; (ii) to the Market Committee's ordinary operating and administration expenses, including adequate maintenance, taxes (if any), and debt service requirements; and (iii) only after the items in (i) and (ii) above have been paid or provided for, to development purposes, including expansion of market facilities and building of farm-to-market feeder roads. 6. Appraisal of Sub-loans In accordance with sound banking practice, each PCB shall carry out or cause to be carried out a detailed appraisal for each Sub-loan, either by its own staff or by consultants approved by ARC, in order to ensure, inter alia, in the case of Market Committee beneficiaries, that the Market Committee's proposed investment will result in an efficient and complete functioning market yard, and in the case of market intermediary beneficiaries, that the market intermediary will have a valid license, that its proposed plans have been approved by the Market Committee concerned and the SMD, and that it has the financial capacity to repay the Sub-loan. 7. Insurance (a) Each PCB undertakes to insure, or cause to be insured, or make or cause to be made adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by ARC against 21 hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Each PCB shall cause each Market Committee and market intermediary beneficiary of a Sub-loan to take out and maintain with responsible insurers, or make other adequate provision for, insurance against such risks and in such amounts as shall be consistent with sound practice. 8. Use of Proceeds Except as ARC and the Association may otherwise agree, each PCB shall cause all goods and services financed out of the proceeds of the Credit relent to it by ARC to be used exclusively for the Project. 9. Plans, Specifications, etc. Each PCB shall furnish or cause to be furnished to ARC and the Association, upon request, the plans, specifications, contract documents and construction and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as ARC and the Association shall reasonably request. 10. Records, Financial (ovenants (a) Each PCB: (i) shall maintain, or cause to be maintained, records adequate to record the progress of Part A of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project: (ii) shall enable ARC's and the Association's representatives, or cause them to be enabled, to inspect the goods financed out of such proceeds and relevant records and documents; and (iii) shall furnish to ARC and the Association or cause ARC and the Association to be furnished all such information as ARC and the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (b) Each PCB shall, and shall cause each Market Committee and market intermediary beneficiary of a Sub-loan to, maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. 22 (c) Each PCB shall: (i) establish and maintain separate accounts in respect of all funds disbursed and received on account of the Project; (ii) have such accounts audited, each fiscal year, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (iii) furnish to ARC and the Association as soon as available, but in any case not later than six months after the end of each fiscal year, certified copies of its audited financial statements for such year; and (iv) furnish to ARC and the Association such other information concerning its accounts and financial statements and the audit thereof as ARC and the Association shall from time to time reasonably request. (d) Each PCB shall cause each Market Committee beneficiary of a Sub-loan, during the period any part of a Sub-loan for such beneficiary remains outstanding, to: (i) establish and maintain separate accounts in respect of all funds disbursed and received on account of the Project; (ii) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, 'in accordance with sound auditing principles consistently applied, by auditors acceptable to ARC; (iii) furnish to the PCB and ARC, as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the PCB, ARC and the As ociation shall have reasonably requested, including a certification that to the best of the auditors' knowledge, the proceeds of the Sub-loan have been expended for purposes of the Project; and (iv) furnish to the PCB, ARC and the Association such other information concerning its accounts and financial statements and the audit thereof as the PCB, ARC and the Association shall from time to time reasonably request. 11. Procurement Except as Mysore, ARC and the Association shall otherwise agree, each PCB shall take all necessary steps to ensure that all goods and services to be financed out of the proceeds of the Credit under Category I shall be procured in accordance with, and subject to, the provisions set forth or referred to in Schedule 3 to the Development Credit Agreement. 12. Management and Operations Each PCB shall: (a) at all times manage its affairs, maintain its financial position, and carry on its operations, all in accordance with sound business and financial practices and under the supervision of experienced and competent management assisted by experienced and competent staff in adequate number; and (b) take all steps necessary to acquire, maintain and renew all rights, powers, 23 privileges and franchise: which are necessary or useful in the conduct of its business or in the carrying out of Part A of the Project. 13. Consultation, Information and Inspection (a) Each PCB shall cooperate fully with ARC and the Association to assure that the purposes of the Credit will be accomplished. To that end, each PCB shall, from time to time, at the request of ARC and the Association, exchange views with ARC and the Association through its representatives with regard to the performance of its obligations under the Refinance Agreement, its administration, operations and financial condition, and other matters relating to the purpose of the Credit. (b) Each PCB shall promptly inform ARC and the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by it of its obligations under its Refinance Agreement. (c) Each PCB shall enable ARC's and the Association's representatives to inspect all properties and its records and documents relevant to the Project.