Liquid assets, Reserve Funds, etc

(1) Every credit union shall maintain a minimum aggregate holding of approved liquid assets which on average shall be equivalent to at least ten per cent of shares, deposits and current borrowings, or such higher rates as the Registrar may from time to time prescribe for all such credit unions. (2) Any credit union which fails to maintain the liquid assets required by this section may be liable to pay, on being called upon to do so by the Registrar in writing, a sum equivalent to 10% of the amount of the shortfall and may, in addition, be placed under an Administrator in accordance with the provisions of section 61. (3) Where a credit union realizes a profit from its transactions, that credit union shall establish and maintain a (4) Where the annual audit of a credit union indicates a net surplus, at least ten per cent of such surplus shall be carried to the Reserve Fund. (5) When the amount of the reserves as required by sub- section (3), equals or is more than ten per cent of the total assets of the credit union as shown in its audited financial statement for the financial year, the directors need not set aside any part of the surplus in a Reserve Fund. (6) The Reserve Fund shall be held as a legal reserve and shall not be used for any other purpose, except on liquidation or where there is a loss of confidence, in which case the Reserve Fund may be used under the strict supervision of the Registrar. (7) In addition to the Reserve Fund, every credit union shall maintain Loan Loss Reserve for credit facilities, loans, overdrafts, lines of credit, and advances as may from time to Credit Unions Act 47 time be prescribed by the Registrar after consultation with the respective credit union. (8) In addition to the Reserve Fund required by sub-section (3), a credit union shall put into its reserve at the end of each financial year any increase in the value of assets resulting from a revaluation of its assets in that financial year. (9) If the by-laws so provide, the Board of Directors may, after making provision for a Reserve Fund and before declaring a dividend, set aside an amount not exceeding five per cent of the net earnings in a special fund to be called “The Education Fund”, which shall be used for such educational purposes as the Board of Directors may determine and which shall be administered in the manner prescribed by the rules. (10) Every credit union which fails to establish and maintain a Reserve Fund and Loan Loss Reserve in accordance with section 51(3),(4),(6) and (7), shall be liable to pay, on being called upon to do so by the Registrar in writing, a penalty of two thousand dollars, and where non-compliance with the said provisions continues, there shall be levied a further penalty of one hundred dollars for each day of non- compliance.