Section 8B. The treasurer of any city, if authorized by vote of the city council with the approval of the mayor, and the treasurer of any town if authorized by vote of the town may borrow from time to time such sums as may be necessary to replace funds of such city or town which have been lost or are unavailable as a result of the insolvency, failure or liquidation of a bank or other depository wherein its funds have been deposited. Any such treasurer may issue notes of such city or town payable in or within not more than eight years. Indebtedness incurred by a city or town under the provisions of this section shall be outside its limit of indebtedness as fixed by this chapter.
Any sums received by any such city or town paid out of the assets of said bank by way of dividend or distribution to depositors shall first be applied to the repayment of any notes issued under the authority of this section which remain unpaid at the time such sums are received, and any balance remaining shall be paid into the treasury of such city or town.