The sinking fund is

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JKSSB JE (Civil) Official Paper (Held On: 19 Nov, 2023)

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The fund for rebuilding a structure when its economic life is over
Raised to meet maintenance costs
The total sum to be paid to municipal authorities by the tenants
A part of the money kept in reverse for providing additional structures and structural modification

Answer 1

Explanation:

Sinking Fund:

A sinking fund is a financial reserve created to accumulate funds over time for major capital expenditures like rebuilding or replacing a structure after its useful life ends.
It is commonly used in housing societies, buildings, and infrastructure projects where the cost of full replacement is large and cannot be borne suddenly.
The fund is built by contributing small, regular amounts (monthly or annually), which are invested to gain interest and grow until needed for rebuilding.
It ensures that the property owner or group has sufficient funds available when the structure reaches the end of its economic life, typically 30–60 years.

Additional Information

Maintenance Fund:

This is a separate reserve meant to cover routine and periodic maintenance expenses like painting, plumbing repairs, cleaning, and minor works.
It prevents sudden financial burdens on owners and ensures operational upkeep of the property without interruptions.
It does not cover structural rebuilding, which is handled by the sinking fund.

Reserve Fund:

A broader term that includes various types of financial reserves such as sinking fund, maintenance fund, and contingency fund.
It is used to handle unforeseen or planned expenses related to structure enhancements, regulatory modifications, or emergencies.
Reserve funds may be mandated by housing societies or local laws for financial security and planning.