RBI Permits ‘Urban Cooperative Banks’ to Transfer Balances in Dividend Equalisation Fund to Free Reserves
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Circular No. RBI/2024-25/57 DOR.CAP.REC.No.30/09.18.201/2024-25; Dated: 30.07.2024
RBI has issued guidelines on the treatment of the Dividend Equalisation Fund (DEF) for primary urban cooperative banks (UCBs). RBI observed that some UCBs had created the DEF through the appropriation of profits, intending to utilise these balances to pay dividends in future years when profits are insufficient or where the bank has posted a net loss. Accordingly, RBI now permits UCBs to transfer the balance in DEF to general reserves/free reserves. The circular is applicable with immediate effect.
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