Bangladesh Bank has introduced a tougher dividend policy for banks that allows only institutions with at least Tk 20 billion in paid-up capital to declare cash dividends from 2026 onward.
The move signals the regulator's growing emphasis on building stronger capital buffers and improving the banking sector's ability to withstand economic shocks.
The new directive, issued by Bangladesh Bank on Saturday, comes at a time when the banking industry continues to grapple with rising stress from weak asset quality, capital shortages and broader global economic uncertainty.
Industry insiders say the policy could accelerate consolidation and encourage the emergence of larger, financially stronger banks.
According to a circular issued by the central bank's Supervisory Policy and Coordination Department, the measure is intended to help the industry withstand potential risks arising from both domestic and global economic uncertainties while improving the overall capital base of commercial banks.
The new policy takes effect from the current calendar year and will apply to dividend declarations for 2026.
A desktop analysis based on data available on the Dhaka Stock Exchange website suggests that only one listed bank -- BRAC Bank -- currently meets the required paid-up capital threshold among the country's 36 listed banks. Another institution, Sommilito Islami Bank, formed through the merger of five Shariah-based banks, also appears to qualify under the new requirement.
However, the bank's managing director has yet to be appointed following the merger process.
People familiar with developments in the banking industry said increasing capital buffers has become essential for absorbing potential economic shocks and maintaining financial stability.
They also said the central bank's broader objective may be to encourage the emergence of larger and financially stronger institutions rather than maintaining a banking system dominated by relatively small banks with limited capital strength.
Shah Md Ahsan Habib, professor at the Bangladesh Institute of Bank Management (BIBM), told the FE that the move indicates a strategic shift by the regulator.
"This is most probably an indication that the central bank wants stronger and larger banks, as there is no alternative to adequate capital in absorbing financial shocks," he told the FE.
He added that many local banks still operate with significantly lower capital bases compared with their counterparts in peer economies, making capital strengthening increasingly important amid economic uncertainty at home and abroad.
jasimharoon@yahoo.com
