Bangladesh Bank limits NBFIs’ dividends
In a circular on Wednesday, the central bank said no NBFI may disburse more than a 15% cash dividend
For better liquidity to offset the economic impacts of Covid-19, the Bangladesh Bank has decided to put an upper limit on dividends declared by non-bank financial institutions (NBFIs).
In a circular on Wednesday, the central bank said no NBFI can disburse more than a 15% cash dividend.
According to the circular, NBFIs with a below 10% capital adequacy ratio and an above 10% non-performing loans (NPL) ratio cannot announce a dividend.
Any NBFI with an above 10% NPL ratio will need the central bank's permission to disburse dividends.
Meanwhile, NBFIs which availed the facility of provisioning deferral from the Bangladesh Bank can announce at best 5% stock dividend with prior approval from the bank.
The circular will remain upheld until further notice.
The Bangladesh Bank restricted dividends by commercial banks in 2020 and in 2021 the restriction is announced to remain there until further notice.
Now, the restriction on NBFI will force IDLC Finance Ltd to revise its dividend for 2020.
The board of directors of listed NBFIs recently recommended 35% cash dividends out of their record profit for 2020.
