Deferral facility takers won't be able to declare dividends

The banks currently availing the "deferral facility" from the Bangladesh Bank (BB) to maintain provisioning and other expenditure will not be allowed to declare dividends for that year.

For instance, if a bank takes the deferral facility from the BB in 2025, it will not be able to declare dividends for the year ending December 2025.

However, the new directive will be applicable from the year ending December 2025.

Banks will be permitted to disburse cash dividends only from the profits generated in that specific year, not from previous years.

The declared dividend must not exceed 30 per cent of the bank's paid-up capital.

The BB updated its dividend policy for banks on Thursday.

Earlier, it issued the dividend policy for banks in March 2021.

The policy's main objective is to strengthen capital structure of banks.

Under the new directive, banks with non-performing loans (NPLs) exceeding 10 per cent of their total loans will be barred from distributing dividends to shareholders.

The restrictions take effect for the financial year ending on 31 December 2025.

jasimharoon@yahhoo.com