Section 42: Profits, losses, and distributable earnings

1[42. Profits, losses, and distributable earnings.⸺(1) The annual distributable profit for a year shall be determined as follows:— A=B+C-D Where A = Distributable profit; B = Net annual profit of the Bank as reflected in the audited financial statements; C = amount of unrealized gains transferred to unrealized revaluation reserve account in previous one or more years that realized during the year; and D = amount of unrealized gains included in ‘B’. (2) The Bank shall allocate the distributable profit as follows:⸺ (a) an amount equivalent to twenty percent of distributable profit shall be credited to the general reserve account until the sum of the capital and general reserves equal eight percent of the total monetary liabilities of the Bank; (b) as may be determined by the Board, following a consultation with the Bank’s external auditors, from time to time shall be transferred to the special reserve accounts created for any of its specific, identified liability, contingency or expected diminution in the value of its assets; and (c) after accounting for the amounts as aforesaid, any remaining amount of the distributable profit shall be transferred to the Federal Government within thirty days after making the financial statements public. (3) Following the initial attainment of the eight percent level, in case the sum of the Bank’s capital and general reserves falls below such required level of monetary liabilities, the Bank shall allocate all the distributable profit to the Bank’s capital and general reserves until the required level is re-established. (4) If in any financial year the Bank incurs a net loss, this loss shall first be charged to the general reserve account and subsequently applied against the paid-up capital. (5) No distribution shall be made out of current income of the Bank except as permitted by sub- section (2).] 1S. 42 subs. by the State Bank of Pakistan (Amendment) Act, 2022 (VI of 2022), s. 26.

Effective date: 1956-04-18

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