Question

Under Section 45-IC of the RBI Act, 1934, every non-banking financial company must transfer to its reserve fund a sum not less than what percentage of its net profit every year before any dividend is declared?

Q: Answer-Under Section 45-IC of the RBI Act, 1934, every non-banking financial company must transfer to its r...

Section 45-IC1 requires every non-banking financial company to create a reserve fund and transfer to it a sum not less than twenty per cent of its net profit every year, as disclosed in the profit and loss account, before any dividend is declared. No appropriation from the reserve fund may be made except for purposes specified by the Bank, and such appropriation must be reported within twenty-one days. The mandated transfer is twenty per cent of net profit.