RBI allows commercial banks to pay up to 50% of pre-Covid dividends
The Reserve Bank on Thursday authorized commercial banks to pay dividends for fiscal year 21, subject to certain conditions and limits. The revised RBI circular provides that commercial banks can pay up to 50% of what they could before COVID.
For cooperative banks, all restrictions on dividends have been removed. In the face of the COVID-19 crisis, the RBI had banned all banks from declaring a dividend for fiscal year 20, as the focus was on capital conservation in an uncertain environment.
All banks were urged to exercise caution given the adequacy of provisions and the economic environment while considering the dividend on equities, the central bank said. “All banks will continue to meet applicable minimum regulatory capital requirements after the payment of dividends,” the RBI said in a late-night circular.
When declaring dividends on equity shares, it will be up to the board of directors to examine the current and projected financial position of the bank with regard to the applicable capital requirements and the adequacy of provisions, taking into account the economic environment and outlook. for profitability, he added.
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