Reserve Fund

(1) Every society which does or can, derive a profit from its transactions, shall maintain a reserve fund. (2) At least one-fourth net profits of the society each year, shall be carried to the reserve fund; and such reserve fund may be used in the business of the society or may, subject to the provisions of section 71, be invested, as the State Government may by general or special order direct, or may, with the previous sanction of the State Government, be used in part for some public purpose likely to promote the objects of this Act, or for some such purpose of the State, or of local Interest : Provided that if the Registrar is satisfied that financial condition of the society is such that it is unable to carry to its reserve fund an amount up to the aforesaid limit of one-fourth of its net profits, he may by order in writing for such period as he may specify in the order, fix for the society a limit lower that the aforesaid limit but not lower than one-tenth of its net profits. (3) Where the reserve fund of a society exceeds it authorized share capital, then, notwithstanding anything contained in sub-section (1), the society may, with the previous permission of the Registrar carry to its reserve fund each year an amount which may be less than one-fourth but not less than one-tenth of its net profits. (2) Every year, the society shall carry at least fifteen per cent. of the net profit to the Bad Debt Reserve Fund. (3) All debts which are found to be irrecoverable and certified as such by a certified auditor and expenses incurred in recovering the same shall first be written off against the Bad Debt Reserve Fund. (4) Notwithstanding anything contained in section 67— (a) the balance of bad debts, if any, remaining after first writing them off under sub-section (3); and (b) all losses incurred by a society including those suffered on account of settlement of disputes under section 98 which are certified as such by a certified auditor, may be written off against the reserve fund maintained under section 67 to the extent of not more than thirty per cent. of the balance in that fund: Provided that no bad debt or loss shall be written off against the bad debt fund or, as the case may be, the reserve fund, unless the society in the general meeting passes a resolution approving the same by a majority of total membership of the society and by a majority of not less than two-third of the members of the society present and voting. (5) Notwithstanding anything contained in the Act, no society in co-operative credit structure shall be directed by the State Government or otherwise required to contribute to any fund other than those for improving the net worth and owned fund of the society.