BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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50% of profit after dividend
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20% of profit before dividend
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15% of total profits
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20% of total profits
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Detailed explanation-1: -Under Section 17, every banking company incorporated in India is required to transfer at least 25% of its current profit to its reserve fund. It is known as statutory reserve. Only those banks get exemptions from this legal condition whose reserve along with share premium if any become equal to paid up capital.
Detailed explanation-2: -469(27)-74 dated December 12, 1974, all Indian Scheduled Commercial banks are required to transfer at least 25% of the disclosed profits (before making adjustment/provision for bonus to staff) to Reserve Fund as against the level of 20% prescribed in Sections 17(1) of Banking Regulation Act, 1949.
Detailed explanation-3: -Under the provisions of Section 11 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies), no primary (urban) cooperative bank can commence or carry on banking business if the real or exchangeable value of its paid-up capital and reserves is less than Rs. one lakh.
Detailed explanation-4: -Section 29 in BANKING REGULATION ACT, 1949.