BB asks banks not to disburse cash dividend till Sept 30

Bangladesh Bank (BB) has asked the banks not to disburse cash dividend till September 30 with an aim to boost the fund flow in the banking system during the coronavirus outbreak.

The central bank on Monday issued a guideline limiting the highest dividend for the banks for 2019 in the wake of Covid-19 outbreak, report bdnews24.com and BSS.

As per the BB circular, the banks can declare maximum 30 per cent dividends– 15 per cent cash and 15 per cent stocks. But the authorities will not be allowed to disburse the declared cash dividend among shareholders before September 30.

It is necessary to maintain the cash flow by strengthening the banks’ capital during the coronavirus pandemic, Bangladesh Bank said.

The latest move will unlock funds for the banks enabling them to lend more to businesses.

The central bank also set some conditions on maximum dividends. The banks that had already announced dividends have been asked to postpone the announcements and readjust as per the ceiling.

Shakil Rizvi, a stock market analyst, believes both the banks and the shareholders will benefit from the move in the long run.

 “The shareholders will get fewer dividends now, but it will be good for the share market in the long run,” said Ahmad Rashid Lali, a former chief of DSE Brokers Association of Bangladesh.

In his view, the banks would suffer a drop in profits if the economy sinks. “So they must play a role in reviving the economy now,” Lali added.