What is IMF quota? How it works?

Question

Kapil bought two hundred 10% preference shares of ABC Ltd in the year 2017. The face value of each share is ₹100 . He did not receive any dividend on them during the year 2017 due to insufficient profits of the company . In the year 2018 , the company made surplus profits. Calculate the amount of dividend payable to him in the year 2018 assuming he is holding a) cumulative preference shares , b) non - cumulative preference shares

Answer 1

In the IMF, quota is the financial contribution made by a member. As per the working of the IMF, each member has to subscribe to the quota of the Fund. Quota constitutes the resource base of the IMF and it is out of the quota that the IMF gives loans to the needy members.

Quotas for member countries are initially determined by a calculation based on the size of the national economy (GDP, current account transactions in the balance of payments). They are periodically increased, in response to needs for the IMF's operations through quota revisions. The Articles of Agreement provide for a general review of the quotas every five years.

For any member country, out of the quota, 25 % should be paid in the form of foreign currency or gold (called as reserve tranche or gold tranche) to the Fund, and the remaining 75% in the form of domestic currency (called as credit tranche).