BB puts curbs on banks’ cash dividend disbursement

  • Abdur Rahim Harmachi, Chief Economics Correspondent,
    Published: 2020-05-11 21:04:35 BdST

Bangladesh Bank has barred banks from disbursing cash dividends for the year 2019 until Sept 30 to boost the fund flow in the banking system during the coronavirus outbreak.

The banks will not be allowed to disburse more than 30% dividends among shareholders: 15% cash and 15% stocks, the central bank said in a notice on Monday.

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.