Banks in India have been granted general permission to declare dividends, subject to compliance with the guidelines laid out in terms of circular DBOD.NO.BP.BC.88/ 21.02.067/2004-05 dated May 4, 2005 and other associated circulars.
In an environment of heightened uncertainty caused by COVID-19, it is important that banks conserve capital to retain their capacity to support the economy and absorb losses. Accordingly, it has been decided that all banks shall not make any further dividend payouts from the profits pertaining to the financial year ended March 31, 2020 until further instructions.
This restriction shall be reassessed by the Reserve Bank based on the financial results of banks for the quarter ending September 30, 2020.
Sanjeev Kumar Khanna (Financial Mentor)
Courtsey: RBI
