(a) Under any contract made or awarded by the state, or by any public department or official thereof, or under any subcontract made directly thereunder with the contractor, the contractor and any subcontractor may, from time to time, withdraw the whole or any portion of the amount retained for payments to the contractor or subcontractors, as the case may be, pursuant to the terms of the contract or subcontracts, upon depositing with the Comptroller (1) United States Treasury bonds, United States Treasury notes, United States Treasury certificates of indebtedness or United States Treasury bills, or (2) bonds or notes of the state of Connecticut or (3) bonds of any political subdivision in the state of Connecticut. No amount shall be withdrawn in excess of the market value of the securities at the time of deposit or of the par value of such securities, whichever is lower.

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(b) The Comptroller shall, on a regular basis, collect all interest or income on the obligations so deposited and shall pay the same, when and as collected, to the contractor and the subcontractors who deposited the obligations. If the deposit is in the form of coupon bonds, the Comptroller shall deliver each coupon as it matures to the contractor and the subcontractors.

(c) Any amount deducted by the state, or by any public department or official thereof, pursuant to the terms of the contract, and subcontracts made directly thereunder with the contractor, from the retainages due the contractor and said subcontractors, shall be deducted, first from that portion of the retainages for which no security has been substituted, then from the proceeds of any deposited security. In the latter case, the contractor and the subcontractors shall be entitled to receive interest, coupons or income only from those securities which remain after such amount has been deducted.