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The Constitution (73rd Amendment) Act was passed in 1992 and it came into effect on 24 April 1993. The Act empowered state governments to take the necessary steps that would lead to the formalisation of the gram panchayats and help them operate as units of self-governance. The Directive Principles of State Policy in the Constitution of India lays down in Article 40 that the government shall facilitate the establishment and smooth functioning of the gram panchayats. The requirement of 'no dues’ certificate has also been dispensed with in respect of small loans up to Rs.50,000 availed by small and marginal farmers, share-croppers and the like and, instead, only a self-declaration from the borrower is required.
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