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RBI directs banks to halve dividend payouts amid 2nd Covid wave

This is a bid to conserve capital and stay resilient.

Reserve Bank of India | Coronavirus | Economic recovery

IANS  |  Mumbai 

Crony capitalism has built up slowly in India, emerging as a Frankenstein’s monster a decade and a half after politicians began to unchain the private sector in the early 1990s
RBI | Representational image

The (RBI) has directed the to restrict dividend payouts to 50 per cent in a bid to conserve capital and stay resilient.

In a notification to all the commercial and co-operative banks, RBI said that in view of the continuing uncertainty caused by the ongoing second wave of Covid-19 in the country, it is crucial that remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses.

"Therefore, while allowing to pay dividend on equity shares, it has been decided to review the dividend declaration norms for the year ended March 31, 2021," it said.

Banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than fifty percent of the amount determined 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 said.

RBI added that all banks shall continue to meet the applicable minimum regulatory capital requirements after dividend payment.

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, it added.



(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Fri, April 23 2021. 15:14 IST