Every banking company incorporated {Subs.by Act 20 of 1950, s.3, for “in a State”.} [in India] shall maintain a reserve fund, and shall, out of the net profits of each year and before any dividend is declared, transfer a sum equivalent to not less than twenty per cent.of such profits to the reserve fund until the amount of the said fund is equal to the paid-up capital.Explanation.—For the purposes of this section, the expression ” net profits ” shall have the meaning assigned to it in sub-section (3) of section 87C of the Indian Companies Act, 1913.
