Section 45 IC - Reserve fund : RBI Act 1934
What is Reserve fund?
Section 45 IC of
Reserve Bank of India Act 1934
Section 45-IC of RBI Act 1934 : "Reserve fund"
(1) Every non-banking financial company shall create a
reserve fund and transfer therein a sum not less than twenty per
cent of its net profit every year as disclosed in the profit and
loss account and before any dividend is declared.
(2) No appropriation of any sum from the reserve fund shall
be made by the non-banking financial company except for the
purpose as may be specified by the Bank from time to time and
every such appropriation shall be reported to the Bank within
twenty-one days from the date of such withdrawal :
Provided that the Bank may, in any particular case and for
sufficient cause being shown, extend the period of twenty-one
days by such further period as it thinks fit or condone any
delay in making such report.
(3) Notwithstanding anything contained in sub-section
(1), the Central Government may, on the recommendation
of the Bank and having regard to the adequacy of the
paid-up capital and reserves of a non-banking financial
company in relation to its deposit liabilities, declare
by order in writing that the provisions of sub-section
(1) shall not be applicable to the non-banking financial
company for such period as may be specified in the order
Provided that no such order shall be made unless the amount
in the reserve fund under sub-section (1) together with the
amount in the share premium account is not less than the paid-up
capital of the non-banking financial company.