Statutory reserve

Statutory reserve means that there is a certain amount of money that a company has to set aside and keep as a backup just in case something bad were to happen. It's kind of like having a piggy bank that you're not allowed to touch unless there's an emergency.

For example, let's say you have a lemonade stand. It's really important to not just spend all of your money on new toys or candy. You have to set aside some of the money you make and put it in a safe place, just in case you need it later. That money you set aside is your statutory reserve.

The government also requires big companies like banks and insurance companies to have statutory reserves, to make sure they have enough money to stay strong and help people if there's a big problem. Basically, it helps make sure that companies don't run out of money when things get tough.