Section 18   [ View Judgements ]

Obligation to create reserve fund

(1) Every micro finance institution registered with the Reserve Bank under this Act shall create a reserve fund and transfer therein a sum, representing such percentage, as may be specified by the Reserve Bank, of its net profit or surplus realised by providing micro finance services every year as disclosed in the profit and loss account or income and expenditure account and before surplus is utilised for any other purpose:

Provided that nothing contained in this sub-section shall apply to a non-banking finance company registered with the Reserve Bank which is maintaining such reserve fund pursuant to any provisions of the Reserve Bank of India Act, 1934 or any directions or regulations issued thereunder.

(2) No appropriation of any sum from the reserve fund shall be made by the micro finance institution, except for the purpose, as may be specified by the Reserve Bank from time to time, and every such appropriation shall be reported to the Reserve Bank within twenty-one days from the date of such appropriation.

(3) The Reserve Bank may, in the public interest or in the interest of clients of any micro finance institution, direct any micro finance institution or any class of micro finance institutions to invest the whole or part of such reserve fund in such unencumbered securities, as it may, by regulations specify.

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