law: Banking Regulation Act, 1949
  17. Reserve Fund
  (1) Every banking company incorporated in
  
  India shall create a reserve fund and 50[* **] shall, out of the balance of
  
  profit of each year, as disclosed in the profit and loss account prepared under
  
  section 29 and before any dividend is declared, transfer to the reserve fund a
  
  sum equivalent to not less than twenty per cent of such profit.
  (1A) Notwithstanding anything contained in
  
  sub-section (1), the Central Government may, on the recommendation of the
  
  Reserve Bank and having regard to the adequacy of the paid-up, capital and
  
  reserves of a banking company in relation to its deposit liabilities, declare
  
  by order in writing that the provisions of sub-section (1) shall not apply to
  
  the banking company for such period as may be specified in the order:
  PROVIDED that no such order shall be made
  
  unless, at the time it is made, the amount in the reserve fund under
  
  sub-section (1), together with the amount in the share premium account is not
  
  less than the paid-up capital of the banking company.]
  (2) Where a banking company appropriates any
  
  sum from the reserve fund or the share premium account, it shall, within
  
  twenty-one days from the date of such appropriation, report the fact to the
  
  Reserve Bank, explaining the circumstances relating to such appropriation:
  PROVIDED that the Reserve Bank may, in any
  
  particular case, extend the said period of twenty-one days by such period as it
  
  thinks fit or condone any delay in the making of such report.