Central bank raises dividend payment limit for banks

The central bank has decided to increase by 5.0 percentage points the maximum ceiling of dividend offered by banks to the shareholders.

If implemented, the banks would be able to declare maximum 35 per cent dividend from the existing level of 30 per cent, officials said.

The decision was taken at an informal meeting of senior officials concerned held at the Bangladesh Bank (BB) headquarters in Dhaka on Monday, with BB Governor Fazle Kabir in the chair.

"We've decided to increase the maximum limit of dividend to be announced by the banks for 2020 after holding necessary consultation with the stakeholders concerned," a BB senior official told the FE after the meeting.

The central bank's decision came hours after it assured the Bangladesh Securities and Exchange Commission (BSEC) of taking such measure at another meeting on the day at the BSEC office in the city.

After the meeting, BSEC executive director and spokesperson Mohammad Rezaul Karim told the reporters that the central bank has agreed to raise dividend limit of the listed banks to 35 per cent.

The BB will take necessary initiative to implement it, he said.

The BB official said the central bank was working on the issue. "A circular is expected to be issued soon."

Under the existing provision, the banks having capacity to keep 15 per cent or more in capital reserve against all risk-weighted assets, including 2.5 per cent capital conservation buffers, will be allowed to provide 30 per cent dividend, including 15 per cent cash dividend, according to a notification, issued by the BB, on February 07.

"We may issue another notification soon to clarify the maximum limit of dividend, announced by non-banking financial institutions (NBFIs)," the central banker said without elaborating.

Mr Rezaul Karim said they had discussion on various issues for the development of the stock market and money market along with strengthening their mutual coordination.

The three-member high-powered delegation, led by BB executive director Md. Masud Biswas, attended the meeting on behalf of the central bank.

BSEC chairman Prof. Shibli Rubayat-Ul-Islam, commissioner Prof. Sheikh Shamsuddin Ahmed and other officials were present, among others.

Mr Karim said the circular issued earlier allowed the listed banks to pay a maximum of 30 per cent dividend.

He said the listed non-bank financial institutions (NBFI) could pay a maximum of 15 per cent cash dividend as per another circular issued by the central bank on February 24.

They also discussed at the meeting about taking initiative so that the financial institutions can pay bonus dividend in addition to that of 15 per cent cash, said Mr. Karim. However, the central bank will clarify this issue, he added.

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