In
terms of Section 21 of the Banking Companies Ordinance 1962
every banking company incorporated in Pakistan is required
to create a ‘Reserve Fund’ and to transfer to
the said Fund certain percentage of profit each year, as discloses
in its Profit & Loss Account, before any dividend is declared,
In this connection banks were advised vide our BCD Circular
No. 28 dated the 21st November, 1972 that profit for the purpose
of computing the amount to be transferred to the said Fund
should be the profit as disclosed in in a bank’s Profit
& Loss Account prepared according to Section 34 of the
Banking Companies i.e. before making provision for income
tax.
Since
the forms of Balance Sheet and Profit & Loss Account of
banks as set out in the Second Schedule to the Banking Companies
Ordinance, 1962 have since been amended vide BPRD Circular
No. 31 dated 13th August 1997 banks may therefore, comply
with the provisions vide section 21 abide by creating reserve
fund, in the prescribed manner, out of the “Profit after
taxation” as disclosed in the Profit & loss Account
of a bank.
This
supersedes the instructions contained in our earlier BCD Circular
No 28 dated the 21st November, 1972.
Please
acknowledge receipt.
|