Declaration of dividends by banks

Last updated: 05 December 2020

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The Reserve Bank of India (RBI) has directed all commercial and cooperative banks not to declare any dividend payments on equity shares for the financial year ending March 31, 2020. This decision has been made to help banks conserve capital during the ongoing COVID-19 pandemic, which has created significant economic stress and uncertainty. The aim is to strengthen banks' balance sheets and ensure they can continue supporting lending to the real economy.

RBI/2020-21/75
DOR.BP.BC.No.29/21.02.067/2020-21

December 4, 2020

All Commercial Banks and All Cooperative Banks,

Madam / Dear Sir,

Declaration of dividends by banks

Please refer to our circular DOR.BP.BC.No.64/21.02.067/2019-20 dated April 17, 2020, on the captioned subject.

2. In view of the ongoing stress and heightened uncertainty on account of COVID-19, it is imperative that banks continue to conserve capital to support the economy and absorb losses. In order to further strengthen the banks’ balance sheets, while at the same time support lending to the real economy, it has been decided that banks shall not make any dividend payment on equity shares from the profits pertaining to the financial year ended March 31, 2020.

Yours faithfully,

(Usha Janakiraman)
Chief General Manager

FAQ :

Banks are prohibited from making any dividend payments on equity shares from the profits earned during the financial year ending March 31, 2020.

The decision is a measure to conserve capital and strengthen banks' balance sheets in response to the ongoing stress and uncertainty caused by the COVID-19 pandemic.

All commercial banks and all cooperative banks are subject to this directive.

The restriction aims to support the economy by ensuring banks have sufficient capital to absorb losses and continue lending to the real economy.

Notification No : RBI/2020-21/75 DOR.BP.BC.No.29/21.02.067/2020-21
Source : https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12003&Mode=0

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