Multiple choice

The amount transferable to the reserve fund by the banks incorporated in India is _________ of the profit for each year.

  1. 25%

  2. 20%

  3. 10%

  4. There are no specifications.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The mandate of Section 17 states that every banking company will have to transfer to a reserve fund every year, a sum equivalent to "not less than twenty per cent of such profit". In other words, at least 20% of the profit as shown in the Profit and Loss Account before declaration of any dividend has to be transferred to the reserve fund.

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