Page 53 - Banking Finance May 2021

RBI CIRCULAR

RBI

CIRCULAR

Declaration of dividends by banks minimum regulatory capital requirements after
dividend payment. While declaring dividend on equity
RBI/2021-22/23 shares, it shall be the responsibility of the Board of
April 22, 2021 Directors to inter-alia consider the current and
projected capital position of the bank vis-à-vis the
1. Please refer to our circular DOR.BP.BC.No.29/ applicable capital requirements and the adequacy of
21.02.067/2020-21 dated December 4, 2020, and other provisions, taking into account the economic
associated circulars on the captioned subject. environment and the outlook for profitability.
2. In view of the continuing uncertainty caused by the
(Usha Janakiraman)
ongoing second wave of COVID-19 in the country, it is
Chief General Manager
crucial that banks remain resilient and proactively raise
and conserve capital as a bulwark against unexpected
losses. Therefore, while allowing banks to pay dividend
on equity shares, it has been decided to review the Enhancement of limit of maximum
dividend declaration norms for the year ended March balance per customer at end of the day
31, 2021 as below.
from Rs. 1 lakh to Rs. 2 lakh – Payments
Commercial Banks
3. In partial modification of the instructions contained in Banks (PBs)
circular DBOD.NO.BP.BC.88/21.02.067/2004-05 dated RBI/2021-22/20
May 4, 2005, banks may pay dividend on equity shares April 8, 2021
from the profits for the financial year ended March 31,
2021, subject to the quantum of dividend being not 1. Please refer to paragraph 3 of Statement on
more than fifty percent of the amount determined as Developmental and Regulatory Policies dated April 7,
per the dividend payout ratio prescribed in paragraph 2021 on the above subject.
4 of the said circular. Other instructions in the circular
2. In terms of paragraph 4(i) of the ‘Guidelines for
dated May 4, 2005 shall remain unchanged.
Licensing of Payments Banks’ (Licensing Guidelines)
Cooperative Banks dated November 27, 2014, PBs were restricted to hold
4. Cooperative banks shall be permitted to pay dividend a maximum balance of Rs. 1 lakh per individual
on equity shares from the profits of the financial year customer at the end of the day. It was also indicated
ended March 31, 2021 as per the extant instructions. in the guidelines that after gauging the performance
General of the PBs, RBI may consider increasing the maximum
5. All banks shall continue to meet the applicable balance limit.

BANKING FINANCE | MAY | 2021 | 53