The Reserve Bank of India (RBI) has directed the banks to prohibit dividend payouts to 50% in a bid to preserve capital and keep resilient.
In a notification to all of the industrial and co-operative banks, RBI stated that in view of the persevering with uncertainty attributable to the continued second wave of Covid-19 within the nation, it’s essential that banks stay resilient and proactively increase and preserve capital as a bulwark in opposition to surprising losses.
“Therefore, while allowing banks to pay dividend on equity shares, it has been decided to review the dividend declaration norms for the year ended March 31, 2021,” it stated.
Banks could pay dividend on fairness shares from the earnings for the monetary 12 months ended March 31, 2021, topic to the quantum of dividend being no more than fifty p.c of the quantity decided as per the dividend payout ratio.
“Cooperative banks shall be permitted to pay dividend on equity shares from the profits of the financial year ended March 31, 2021 as per the extant instructions,” it stated.
RBI added that every one banks shall proceed to meet the relevant minimal regulatory capital necessities after dividend fee.
While declaring dividend on fairness shares, it shall be the accountability of the Board of Directors to inter-alia contemplate the present and projected capital place of the financial institution vis-a-vis the relevant capital necessities and the adequacy of provisions, making an allowance for the financial setting and the outlook for profitability, it added.
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