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      Question

      Banking company incorporated in India is required to

      create a reserve fund __________________ transfer to the reserve fund a sum equivalent to not less than twenty per cent of such profit
      A Before any dividend is declared Correct Answer Incorrect Answer
      B Out of the balance of profit of each year as disclosed in the profit and loss account prepared under section 29 Correct Answer Incorrect Answer
      C Either a or b Correct Answer Incorrect Answer
      D Both a & b Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Section 17. Reserve Fund: (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.

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