The Bangladesh Bank has rejected the dividend declared by the state-owned Rupali Bank for its shareholders.
According to the country's main bourse - Dhaka Stock Exchange (DSE), the final decision on the Rupali Bank's declared dividend is now left to the bank's shareholders.
The matter will be discussed at the company's annual general meeting (AGM) for the approval of its shareholders.
The bank announced a 5 percent stock dividend for the last financial year that ended on December 31, 2019 at a board meeting on June 26 this year.
In May, the Bangladesh Bank imposed certain conditions on the banks' dividend declaration to keep the banks' liquidity flow and capital base strong in the wake of the novel coronavirus crisis.
As per the central bank's direction, a bank now can declare a maximum 30 percent dividend with cash and stock dividend combined, but it cannot pay more than 15 percent cash dividend.
Besides, it was also stipulated that the banks would not distribute the declared cash dividend among the entrepreneurs and institutional investors till September 30.
However, such a decision of the central bank did not affect the Rupali Bank's share price, which increased by 6.21 percent to Tk30.70 at the DSE on Thursday.
At the end of last year, the bank posted earnings per share of Tk1.38. But that year the bank faced a huge cash crisis. Following this crisis its net operating cash flow per share stood at Tk75.30 negative.
A Bangladesh Bank official said the Rupali Bank has provision shortfall against classified loans and it has an operating cash crisis. That is why the central bank did not approve its dividend.
However, in the first half of this year the Rupali Bank did well in its business. The bank posted earnings per share of Tk0.37, which was 48 percent higher than the previous year's same period.
In this period the bank also overcame the cash crisis. Its net operating cash flow per share now stands at Tk74.54.