#THE REHABILITATION FINANCE ADMINISTRATION ACT, 1948 
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##ARRANGEMENT OF SECTIONS 
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SECTIONS 

1. Short title, extent and commencement. 
2. Definitions. 
3. Establishment and incorporation. 
4. Constitution of the Administration. 
5. Advisory Board. 
6. Terms of office of the members of the Administration and the Advisory Board. 
7. Disclosure of interest. 
8. Removal from membership. 
9. The Chief Administrator. 
10. Staff. 
11. Funds of the Administration. 
12. Business of the Administration. 
13. Loans. 
14. Power to call for repayment before agreed period. 
15. Mode of recovery. 
16. Accounts and audit. 
17. Power of inspection. 
18. Returns. 
19. Power of Central Government to give direction. 
20. Exemption from taxes. 
21. Liquidation of the Administration. 
22. Delegation. 
23. Power to make rules. 
24. Power to make regulations. 
25. Laying of rules and regulations before Parliament. 



#THE REHABILITATION FINANCE ADMINISTRATION ACT, 1948 

##ACT NO. 12 OF 1948 

[23rd March, 1948.] 

  An Act to establish the Rehabilitation Finance Administration. 

WHEREAS it is expedient to establish a Rehabilitation Finance Administration for the purpose of giving 
financial  assistance  on  reasonable  terms  to  displaced  persons  to  enable  them  to  settle  in  business  or 
industry; 

  It is hereby enacted as follows: — 

1. **Short title, extent and commencement.**—(1) This Act may be called the Rehabilitation Finance 
Administration Act, 1948. 

(2) It extends to the whole of India except the State of Jammu and Kashmir[^1].

(3) It shall come into force on such date as the Central Government may, by notification in the 
Official Gazette, appoint in this behalf. 

2. **Definitions.**—In this Act, unless there is anything repugnant in the subject or context,— 

  (a) “Act” means the Rehabilitation Finance Administration Act, 1948; 

  (b) “Administration” means the Rehabilitation Finance Administration constituted under this Act; 

  (c) “borrower”  means  an  individual,  company,  association  or  body  of  individuals,  whether 
incorporated or not, to whom a loan has been advanced under this Act; 

  (d) “displaced person” means— 

     (i) a person who, being displaced from any area now forming part of Pakistan on account 
of civil disturbances or fear of such disturbances, has settled and is engaged or intends to engage 
in any business or industry in India, or 

     (ii) a person in India who, having had his business, industry or property, wholly or partially 
in any area now forming part of Pakistan, has lost, wholly or partially, such business, industry, 
or property on account of civil disturbances or the fear of such disturbances, and who is engaged, 
or intends to engage in any business or industry in India; 

  (e) “loan” means a sum of money advanced by the Administration— 

     (i) to a displaced person for the purpose of any business or industry in which he is engaged or 
intends to engage himself, or 

     (ii) in  respect  of  any  business  or  industry,  a  substantial  portion  of  which  is  owned  by 
displaced persons; and 

  (f) “prescribed”  means  prescribed  by  rules  made  under  section  23  or  regulations  made  under 
section 24. 

3. **Establishment and incorporation.**—(1) The Central Government shall constitute a Corporation 
called  the  Rehabilitation  Finance  Administration  for  giving  financial  assistance  on  reasonable  terms  to 
displaced  persons  to  enable  them  to  settle  in  business  and  industry 5[or  to  any  business  or  industry,  a 
substantial portion of which is owned by displaced persons.

(2) The  Corporation  shall  be  a  body  corporate  by  the  name  of  the  Rehabilitation  Finance 
Administration having perpetual succession and a common seal, with power, subject to the provisions of 

[^1].  Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu 
and Kashmir and the Union territory of Ladakh. 



this Act, to acquire, hold and transfer property, both movable and immovable, and shall by the said name 
sue and be sued. 

(3) The administration shall have its head office at Delhi and may, with the previous approval of the 
Central  Government,  open  branches  at  such  places  in  India  as  it  may  consider  necessary  to  discharge 
effectively its functions under this Act. 

4. **Constitution of the Administration.**—(1)  The  Administration  shall  consist  of  the  following 
members, namely:— 

  (a) a  Chairman  to  be  appointed  by  the  Central  Government  who  shall  be  called  the  Chief 
Administrator; 

  (b) four officials appointed by the Central Government; and 

  (c) four non-officials nominated by the Central Government. 

(2) No  act  done  by  the  Administration  shall  be  called  in  question  on  the  ground  merely  of  the 
existence of any vacancy or any defect in the constitution of the Administration. 

5. **Advisory Board.**—(1) The Central Government shall constitute an Advisory Board to advise the 
Administration on matters of policy and may where necessary constitute a Regional Committee to advice 
each branch of the Administration. 

(2) The Advisory Board shall consist of such members, not exceeding fifteen in number, as may be 
nominated by the Central Government. 

6. **Terms of office of the members of the Administration and the Advisory Board.**—(1) A 
member appointed under clauses (a) and (b) of sub-section (1) of section 4 shall hold office during the 
pleasure of the Central Government. 

(2) A member nominated under clause (c) of sub-section (1) of section 4 or sub-section (2) of section 5 
shall  hold  office  for  a  term  of  two  years  from  the  date  of  his  nomination  and  shall  be  eligible  for 
re-nomination. 

(3) A nominated  member  may  resign  his  membership  by  writing  under  his  hand  addressed  to  the 
Central Government and he shall thereupon cease to be a member. 

(4) A  casual  vacancy  created  by  resignation  under  sub-section  (3)  or  by  any  other  reason  shall  be 
filled  by  fresh  nomination  and  the  person  nominated  to  fill  the  vacancy  shall  hold  office  only  for  the 
remainder of the term for which the member whose place he takes was nominated. 

7. **Disclosure of interest.**—(1) No member of the Administration shall have any interest, direct or 
indirect, in any business, industry or concern to which any assistance under section 12 has been given or 
is to be given and if any such member acquires such interest at any time during the continuance of such 
assistance, he shall immediately disclose it to the Administration and shall either resign his membership 
or disclose of his interest in such manner and within such time as he may be directed by it. 

(2) Any  member  of  the  Advisory  Board  who  has  any  interest,  director  indirect,  in  any  business, 
industry or concern to which any assistance under section 12 has been given or is to be given or acquires 
such  interest  at  any  time  during  the  continuance  of  such  assistance  shall  immediately  disclose  it  to  the 
Administration  and  shall  not  participate  in  the  proceedings  of  the  Advisory  Board  relating  to  such 
assistance. 

8. **Removal from membership.**—Notwithstanding  anything  contained  in  section  6,  the  Central 
Government may, for any reason which may appear to it to be sufficient, remove any member at anytime 
from the Administration or the Advisory Board. 

9. **The Chief Administrator.**—The  Chief  Administrator  shall  be  a  whole  time  servant  of  the 
Administration  and  shall  receive  such  salaries  and  allowances  and  shall  be  subject  to  such  terms  and 
conditions as may be determined by the Central Government. 

10. **Staff.**—The Administration may, in the manner prescribed,— 

    (a) appoint a Deputy Chief Administrator and such other officers and servants as may be required 
to enable it to carry out the functions under this Act; 

    (b) fix  the  salary  and  allowances  or  other  conditions  of  service  of  the  Deputy  Chief 
Administrator, other officers and servants; 

    (c) fix the remuneration and allowances payable to the members of the Administration and of the 
Advisory Board: 

  Provided  that  the  appointment  and  the  fixation  of  the  salary,  allowances  and  other  conditions  of 
service  of the  Deputy  Chief  Administrator and such  other  officers  as  may  be  prescribed  by  the  Central 
Government, shall be subject to the previous sanction of that Government.

11. **Funds of the Administration.**—(1) The Central Government may from time to time advance 
money to the Administration for its business, the aggregate amount of which, — 

    (a) for the purpose of enabling the Administration to advance loans, shall not, save as hereinafter 
provided, exceed twelve crores and fifty lakhs of rupees; and 

    (b) for  the  purpose  of  enabling  the  Administration  to  meet  any  liability  which  it  may  incur  in 
guaranteeing losses in respect of loans advanced by scheduled banks, shall not exceed two crores of 
rupees: 

  Provided  that  if,  after  the  lapse  of  such  period  from  the  commencement  of  this  Act  as  the  Central 
Government may think fit to fix in this behalf, any sum of money earmarked for the purpose specified in 
clause (b) is found not to have been actually advanced for that purpose and is not, in the opinion of the 
Central Government, likely to be required for the said purpose, the Central Government may utilize the 
money for making advances from time to time to the Administration for the purposes specified in clause 
(a), and when any such advance is made, the limit specified in clause (a) shall be deemed to have been 
correspondingly increased.

(2) Subject  to  any  regulations  that  may  be  made  in  this  behalf,  all  moneys  belonging  to  the 
Administration  which  are  not  immediately  required  by  the  Administration  for  any  purpose shall be 
deposited  in  the  Reserve  Bank  of  India  or  any  agents  thereof  or  invested  in  such  securities  as  may  be 
approved by the Central Government. 

(3) The  Administration  shall  pay  interest  on  the  money  so  advanced  at  the  rate  of  3  per  cent.  per 
annum to the Central Government. 

12. **Business of the Administration.**—The Administration may— 

  (a) subject to the provisions of section 13, advance loans; 

  (b) guarantee,  on  such  terms  and  conditions  as  may  be  agreed  upon,  losses  which  a  scheduled 
bank may suffer in respect of any loan advanced by it and approved by the Administration: 

  Provided  that the  total  amount  which  may  be  guaranteed in  respect  of  any  scheduled  bank  and  the 
terms and conditions on which such guarantee may be given shall be subject to the prior approval of the 
Central Government: 

  Provided  further  that  the  maximum  liability  of  the  Administration  under  such  guarantee  shall  not 
exceed the amount for the time being available under clause (b) of sub-section (1) of section 11; 

  (c) do all such acts and things as may be incidental to or consequential upon the performance of its 
functions under this Act including the running of the Administration.

13. **Loans.**—(1) The Central Government may prescribe the limits as to amounts within which loans 
may be advanced by the Administration. 

(2) For the purpose of advancing any loan under sub-section (1), the Administration may call for any 
report either  through  its  own  staff,  or through  the  District  Officer  of  the  district  in  which  the  borrower 
resides or carries on business, or through any State Government, or through any bank of any other 
appropriate agency. 

(3) The  Administration  shall  charge  interest  from  the  borrower  at  such  rate  not  exceeding 
6 per cent. per annum as may be specified by it. 

(4) The period of the loan shall not exceed fifteen years. 

(5) The loan may be advanced either for fixed capital or working capital or for both. 

  The assets created from the loan shall, notwithstanding any law or usage to the contrary, be deemed 
to be mortgaged to the Administration for the repayment of the loan together with the interest thereon and 
the amount of the loan and the interest thereon shall be first charge on such assets. 

(6) The Administration may also take such further security for any loan as it may consider necessary. 

14. **Power to call for repayment before agreed period.**—Notwithstanding any  agreement  to  the 
contrary, the Administration may, by notice, require any borrower forthwith to repay in full with interest 
thereon any loan borrowed from it,— 

  (a) if  it  appears  to  the  Administration  that  false  or  misleading  information  in  any  material 
particular was given by the borrower for obtaining the loan or while furnishing any information under 
section 17; or 

  (b) if the borrower has failed to comply with the terms of the contract with the Administration in 
the matter of the loan; or 

  (c) if  there  is  a  reasonable  apprehension  that  the  borrower  is  unable  to  pay  his  debts  or  that 
insolvency proceedings or proceedings for liquidation may be commenced against him; or 

  (d) if  for  any  other  reason  it  is  necessary  in  the  opinion  of  the  Administration  to  protect  the 
interests of the Administration. 

15. **Mode of recovery.**—If the amount of loan or any instalment thereof or interest thereon which is 
due, in accordance with the terms of the contract or under the provisions of section 14, has not been 
repaid, the Administration may,— 

  (a) without prejudice to any other remedy provided by law, recover such loan, instalment or interest 
as arrears of land revenue, or 

  (b) take charge of the business or industry of the borrower on such terms and conditions as it may 
deem fit. 

16. **Accounts and audit.**—(1) The  Administration  shall  maintain  proper  accounts  and  other 
relevant records and prepare an annual statement of accounts including the profit and loss account and the 
balance-sheet  in  such  form  as  may  be  prescribed  by  the  Central  Government  in  consultation  with  the 
Company and Auditor-General of India. 

(2) The  accounts  of  the  Administration  shall  be  audited  annually  by  the  Comptroller  and  Auditor 
General of India and any expenditure incurred by him in connection with such audit shall be payable by 
the Administration to the Comptroller and Auditor-General of India. 

(3) The  Comptroller  and  Auditor-General  of  India  and  any  person  appointed  by  him  in  connection 
with the audit of the accounts of the Administration shall have the same rights, privileges and authority in 
connection with such audit as the Comptroller and Auditor-General of India has in connection with the 
audit of Government accounts and, in particular, shall have the right to demand the production of books, 
accounts,  connected  vouchers  and  other  documents  and  papers  and  to  inspect  any  of  the  offices  of  the 
Administration. 

(4) The accounts of the Administration as certified by the Comptroller and Auditor-General of India 
or  any  other  person  appointed  by  him  in  this  behalf  together  with  the  audit  report  thereon  shall  be 
forwarded  annually  to  the  Central  Government  and  that  Government  shall  cause  the  same  to  be  laid 
before both Houses of Parliament.

17. **Power of inspection.**—(1) The Chief Administrator or any other Officer authorised by him  in 
writing in this behalf may, by order, require any borrower to furnish such information or to produce such 
books of accounts and other documents for inspection at such time and place as may be specified in the 
order and the borrower shall comply with such order. 

(2) The Chief Administrator or such officer may inspect such books of account or documents 
produced and take extracts therefrom. 

(3) The  Chief  Administrator  or  the  officer  making  the  inspection  or  any  person  working  under  his 
order shall not communicate or allow to be communicated to any person not legally entitled thereto any 
information relating to the affairs of the borrower. 

(4) If  any  person  contravenes  the  provisions  of  sub-section  (1)  or  sub-section  (3)  he  shall  be 
punishable  with imprisonment  which  may  extend  to  six  months  or  with  fine which  may  extend  to five 
thousand rupees or with both. 

18. **Returns.**—(1) The  Administration shall  furnish to  the  Central  Government a  half-yearly  report 
together  with  accounts  and  such  other  information  within  such  time  and  in  such  manner  as  may  be 
specified by the Central Government. 

(2) The report shall be laid before Parliament as soon as may be after it is prepared. 

19. **Power of Central Government to give direction.**— For the  purposes  of  this  Act,  the  Central 
Government may, from time to time, give to the Administration such general or special directions as it 
thinks fit, and the Administration shall, in the exercise of its functions under this Act, comply with any 
such directions. 

20. **Exemption from taxes.**—  Notwithstanding  anything  contained  in  the  Indian  Income-tax  Act, 
1922 (11 of 1922)[^2], or in any other enactment for the time being in force relating to income-tax, super-tax 
or business profits tax, the Administration shall not be liable to pay any income-tax, super-tax or business 
profits tax or any incomes, profits or gains. 

21. **Liquidation of the Administration.**—(1)  No  provision  of law  relating  to  insolvency  or  to  the 
winding up of companies or corporation shall apply to the Administration and  the Administration shall 
not be placed in liquidation save by the order of the Central Government and in such manner as it may 
direct. 

(2) In the event of the Administration being placed in liquidation, the assets of the Administration, 
after meeting the liabilities, if any, shall vest in the Central Government and the Central Government shall 
thereupon have all the powers of the Administration in recovering the loans remaining unpaid. 

22. **Delegation.**—The  Administration  may,  by  notification  in  the  Official  Gazette,  direct  that  any 
power or duty which under any of the provisions of this Act is conferred or imposed upon the Adminis-
tration shall, in such circumstances and under such conditions, if any, as may be specified in the direction, 
be exercised or discharged by the Chief Administrator, Deputy Chief Administrator or any other person 
subordinate to the Administration. 

23. **Power to make rules.**—The  Central  Government  may,  by  notification  in  the  Official  Gazette, 
make rules for the purpose of giving effect to the provisions of this Act. 

[^2]. See now the Income-tax Act, 1961 (43 of 1961). 


 
24. **Power to make regulations.**—(1)  The  Administration  may,  with  the  previous  sanction  of  the 
Central Government, make regulations, not inconsistent with this Act or the rules made there under, to 
provide for all matters for which provision is necessary or expedient for the purpose of giving effect to 
the provisions of this Act. 

(2) In particular and without prejudice to the generality of the foregoing power such regulation may 
provide for— 

  (a) the conditions on which a person may be recognised as a displaced person, 

  (b) the manner and the time of the general meeting of the Administration, or Advisory Board or 
Regional Committee and the procedure to be followed thereat and the manner in which right of voting 
be exercised, 

  (c) the terms on which the Administration may grant loans, 

  (d) forms of returns and statements required under this Act, 

  (e) the duties and conduct, salaries, allowances and conditions of service of officers, servants and 
agents of the Administration, 

  (f) manner and form of application for loans and contracts, 

  (g) manner in which accounts of the Administration shall be kept and audited, 

  (h) the manner in which and the conditions under which the business or industry of a person to 
whom a loan has been advanced may be taken charge of and administered under section 15, 

  (i) any other matter which has to be or may be specified under this Act. 

(3) All regulations made under this section shall be published in the Official Gazette and shall come 
into force on such date as may be specified therein. 

[^1][25. **Laying of rules and regulations before Parliament.**—Every rule and every regulation made 
under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it 
is in session, for a total period of thirty days which may be comprised in one session or in two or more 
successive  sessions,  and  if,  before  the  expiry  of  the  session  immediately  following  the  session  or  the 
successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or 
both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification or annulment shall be without prejudice to the validity of anything previously done under 
that rule or regulation.]

[^1]. Ins by Act 4 of 1986, s. 2 and the Schedule (w.e.f. 15-5-1986). 