The Reserve Bank of India (RBI) in letter dated 17.04.2020 addressed to all the commercial and corporative banks directs that banks in India are granted general permission to declare dividends in respect to compliance with the guidelines laid in circular dated 04.05.2005 and other associated circulars. Further, the RBI clarifies that considering the current unprecedent event it is important that all the banks conserve capital to retain their capacity to support the economy and absorb losses.
The RBI also made the decision that all banks shall not make any further dividend payouts from profits pertaining to the financial year which ended on 31.03.2020 until further directions. The restriction will be reassessed by the RBI on the financial results of banks for the quarter ending 30.09.2020.
In order to maintain the financial liquidity and a smooth functioning of the banking system it is advisable to adhere to the declaration given by the RBI.
Letter: RBI 23.04.2004