Puneet Hura (student) (39 Points)
22 April 2016An audit client which was earlier registered as an NBFC has surrendered it Certificate of Registration as a NBFC in the year 2015-16. What will be the treatment of statutory reserve created under Section 45 IC of the RBI Act, will it continue to be presented as a reserve or be released to P&L.
Ujas Popat
(Chief Manager Corporate Finance )
(21 Points)
Replied 25 April 2016
Hi Puneet it will be worthwhile to think on below points:
1. Statutory reserve gets created from the profits earned.
2. RBI has not prescribed the mechanisim in which the statutory reserves should be used.
Hence in the event when COR is surrendered ideal treatement of statutory reserves will be to transfer the same to P&L credit balance.
I hope the above is helpful.
Regards,
Ujas
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