Banks must halve their dividends to conserve capital in view of Covid: RBI

Banks could pay maximum 50% of dividend from their profits in 2020-21; no such restriction on cooperative banks

The Reserve Bank of India (RBI) on Thursday said that in order to stay resilient during the Covid-19 crisis banks could pay maximum 50 per cent of dividend from their profits in 2020-21.

 

"In view of the continuing uncertainty caused by the ongoing second wave of Covid-19 in the country, it is crucial that banks remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses," the central bank said in a statement on its website.

 

However, there will be no such restriction on cooperative banks.

 

"While declaring dividend on equity shares, it shall be the responsibility of the board of directors to inter alia consider the current and projected capital position of the bank vis-a-vis the applicable capital requirements and the adequacy of provisions, taking into account the economic environment and the outlook for profitability," the central bank said.