RBI allows banks to pay up to 50 per cent of pre-Covid dividends

The Reserve Bank of India has allowed banks to pay dividends on equity shares. Asking banks to proactively raise and conserve capital in wake of the second wave of Covid, the RBI has told banks to restrict dividend to 50% of what regulations allow.RBI has clarified that All banks shall ensure to meet the applicable minimum regulatory capital requirements after dividend payment.
Last year, the central bank had banned banks from paying dividend after the Covid outbreak.Cooperative banks are permitted to pay dividend on equity shares from the profits of the financial year ended March 31, 2021 Economists feel this is a very positive decision as it would help in improving the environment in the stock market. Cooperative banks are permitted to pay dividend on equity shares from the profits of the financial year ended March 31, 2021, as per the extant instructions, the RBI said. However, all banks must continue to meet the applicable minimum regulatory capital requirements after dividend payment, it added.