4 banks must pay Tk 261.2 million in penalty for violating SEC rules

Four banks are facing a penalty of Tk 261.2 million for not providing cash dividends, instead giving bonus dividends only, which is a violation of the rules of the stock market enlistment.

The banks are Arab-Bangladesh Bank or AB Bank, Mutual Trust Bank, One Bank, and First Security Islami Bank Limited.

According to the law, AB Bank will have to pay Tk 17.2 million, Mutual Trust Bank Tk 89.4 million, One Bank Tk 50 million, and First Security Islami Bank Tk 104.6 million.

According to the law, listed companies must pay cash dividends at least equal to bonus dividends. If the bonus amount is more than cash, the entire bonus share will be taxed at 10 per cent.

As such, the banks will have to suffer the penalty of additional income tax. This Act was enacted in FY 2018–19.

The authorities of four banks say that bonus shares are given as dividend profits, and this decision has been taken to increase the paid-up capital of the banks. The profits will further strengthen the bank's capital.

In the year 2022, from January to December, the profit of AB Bank was Tk 715.4 million. From there, it has been decided to give a 2 per cent bonus share dividend to the shareholders.

The board of the bank has decided to issue only bonus shares without cash dividends. For this, a penalty of Tk 17.2 million has to be added to the bonus shares of Tk 172.2 million at the rate of 10 per cent.

Mutual Trust Bank, like AB Bank, has violated the National Board of Revenue Act by paying only bonus share dividends instead of cash shares. A penalty of Tk 89.4 million at the rate of 10 per cent of Tk 893.7 million is imposed as a penalty under the Income Tax Act.

One Bank will have to pay a fine of 10 per cent of the profit of Tk 493 million of bonus shares, i.e., about Tk 50 million, as the company has only paid bonus share dividends instead of cash dividends.

On the other hand, the total profit of First Security Islami Bank in 2022 was Tk 2.9393 billion. From there, it paid only a 10 per cent bonus share dividend instead of a cash dividend to the shareholders.

The bank's bonus share amounts to Tk 1.046 billion. A fine of 10 per cent has been levied above this amount. The penalty amount stood at Tk 104.6 million. The bank authority will have to pay this penalty.