(1) Every banking company incorporated in India shall create a reserve fund and * shall, out of the balance of profit of each year as disclosed in the profit and loss account prepared under section 29 and before any dividend is declared, transfer to the reserve fund a sum equivalent to not less than twenty per cent. of such profit.
**[(1A) Notwithstanding anything contained in sub-section (1), the Central Government may, on the recommendation of the Reserve Bank and having regard to the adequacy of the paid-up capital and reserves of a banking company in relation to its deposit liabilities, declare by order in writing that the provisions of sub-section (1) shall not apply to the banking company for such period as may be specified in the order:
Provided that no such order shall be made unless, at the time it is made, 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 banking company.]
(2) Where a banking company appropriates any sum or sums from the reserve fund or the share premium account, it shall, within twenty-one days from the date of such appropriation, report the fact to the Reserve Bank, explaining the circumstances relating to such appropriation:
Provided that the Reserve Bank may, in any particular case, extend the said period of twenty-one days by such period as it thinks fit or condone any delay in the making of such report.
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* Certain words omitted by Act 36 of 1962, s. 3 (w.e.f. 16-9-1962).
** Ins. by s. 3, ibid. (w.e.f. 16-9-1962)
Section 16 Prohibition of common directors
Section 19 Restriction on nature of subsidiary companies
Section 20 Restrictions on loans and advances
Section 20A Restrictions on power to remit debts
Section 21 Power of Reserve Bank to control advances by banking companies
Section 21A Rates of interest charged by banking companies not to be subject to scrutiny by courts
Section 22 Licensing of banking companies
Section 23 Restrictions on opening of new and transfer of existing, places of business
Section 24 Maintenance of a percentage of assets
Section 26 Return of unclaimed deposits
Section 26A Establishment of Depositor Education and Awareness Fund
Section 27 Monthly returns and power to call for other returns and information
Section 28 Power to publish information
Section 29 Accounts and balance-sheet