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Deferral of subsidy by Minister

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Section 28.The Minister may, by notice in writing given to the Bank, defer payments of subsidy to the Bank in accordance with clause 12 of the agreement.

8.1.1AGREEMENT

The relevant parts of Clause 12 are as follows:-

12. DEFAULT PROVISIONS

12.1 Persistent Failure by Bank to provide Subsidised Advances

Where it appears to the Commonwealth that there has been a persistent failure by the Bank to provide Subsidised Advances in accordance with this Agreement or to treat applicants for further loans in the manner required by Sub-clause 8.8, the Commonwealth may, by notice in writing serve on the Bank, require the Bank within twenty-eight (28) days after service of that notice to rectify the failure.

12.1.1 Where following such notice the Bank fails to rectify such persistent failure then without prejudice to any other rights the Commonwealth may have:

(a) the Commonwealth shall be entitled to defer part of or all future payments of Subsidy to the Bank until such time as the persistent failure has been so rectified, or for such lesser time which the Commonwealth in its discretion determines provided however that such deferral shall not exceed a period of six (6) months;

and

(b)in the event that the persistent failure continues for a period of three (3) months or more following the Bank's receipt of notice thereof from the Commonwealth, the Bank is required to show cause to the Commonwealth why the Commonwealth should not terminate the Bank's exclusive right to make future Subsidised Advances to Entitled Applicants under the Amended Act and grant that right, together with the associated right to receipt of Subsidy in respect of such future Subsidised Advances, to another person of the Commonwealth's sole choosing and, in the event that the Bank fails to do so, the Commonwealth and the Bank agree that the Commonwealth may terminate the Bank's exclusive right to make future Subsidised Advances to Entitled Applicants under the Amended Act and grant that right together with the associated right to receipt of Subsidy thereon to another person of the Commonwealth' s sole choosing.

12.2 Failure by Bank to comply with any other term of the Agreement

Where it appears to the Commonwealth that there has been a failure by the Bank to comply with any other term of this Agreement the Commonwealth may, by notice in writing served on the Bank, require the Bank within twenty-eight (28) days after service of that notice to rectify that failure.

12.2.1  Where following such notice the Bank fails to rectify such failure then without prejudice to any other rights the Commonwealth may have, the Commonwealth shall be entitled to defer part of or all future payments of Subsidy to the Bank with respect to any Portfolio Asset or Subsidised Advance which is affected by such a failure until such time as the failure has been so rectified, or for such lesser time which the Commonwealth in its discretion determines provided however that such deferral shall not exceed a period of six (6) months.

12.3 Commonwealth Remedies

Should the Commonwealth exercise its right pursuant to Sub-clauses 12.1.1 or 12.2.1 then the deferred Subsidy will be paid to the Bank at the completion of the period of the deferral but the Bank shall have no right to compensation or interest on the Subsidy deferred against the Commonwealth in respect thereto, and further the Bank agrees that it shall continue without reservation or modification to charge interest to Borrowers at the applicable rates of interest prescribed pursuant to those Borrowers' respective Portfolio Assets and/or Subsidised advances, and/or at the rates specified in the Amended Act for inclusion in Certificates of Entitlement in respect of such Advances, as at the date upon which the Commonwealth exercises such right.