On April 22, the Reserve Bank of India (RBI) said in a revised circular that all commercial banks can pay up to 50 percent of what they could pre-COVID on equity shares from the profits for the financial year ended March 31, 2021. For co-operative banks, all the restrictions on dividends have been removed.
Earlier, in the face of the COVID-19 crisis, the RBI had disallowed all the banks from declaring any dividend for FY20, as the focus shifted to conserving capital amid the uncertain environment.
All banks have been advised to be cautious taking into account the adequacy of provisions and economic environment while considering dividend on equity shares, the central bank clarified. "All banks shall continue to meet the applicable minimum regulatory capital requirements after dividend payment," the RBI said in a late evening circular.
While declaring dividend on equity shares, it shall be the responsibility of the Board of Directors to 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.
