Banks must halve their dividends to conserve capital in view of Covid: RBI

 Banks could pay a maximum of 50% of dividend from their profits in 2020-21; no such restriction on cooperative banks

The Reserve Bank of India (RBI) on Thursday said that in order to stay resilient during the Covid-19 crisis banks could pay a maximum of 50 percent of dividend from their profits in 2020-21.

"In view of the continuing uncertainty caused by the ongoing second wave of Covid-19 in the country, it is crucial that banks remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses," the central bank said in a statement on its website.

However, there will be no such restriction on cooperative banks.

"While declaring a dividend on equity shares, it shall be the responsibility of the board of directors to inter alia consider the current and projected capital position of the bank vis-a-vis the applicable capital requirements and the adequacy of provisions, taking into account the economic environment and the outlook for profitability," the central bank said.