Section 45-IC of RBI Act : Section 45-Ic: Reserve Fund

RBI Act

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Explanation using Example

Imagine a non-banking financial company (NBFC) named "QuickFin Services" that provides loans and financial services. At the end of the financial year, QuickFin Services calculates its net profit and discovers it has made a profit of 10 million rupees after tax.

According to Section 45-IC of the Reserve Bank of India Act, 1934, QuickFin Services is required to transfer at least 20% of this net profit, which amounts to 2 million rupees, into a reserve fund before they can declare any dividends to their shareholders.

Later in the year, QuickFin Services faces an unex...

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