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Mumbai, May 5: The Reserve Bank (RBI) has substantially relaxed the eligibility criteria for declaration of dividend by banks, even as it has upped the maximum dividend pay-out ratio to 40% from 33.33% now.
While some industry-watchers see this as the Centre’s attempt, as the majority shareholder, to extract more dividend from state-owned banks, some others feel that it is aimed at allowing weak banks to mobilise resources from the capital market.
The central bank, based on the experience gained, decided to grant general permission to banks to declare dividends subject to compliance with minimum prudential requirements i.e. a bank should have capital to risk weighted assets ratio (CRAR) of at least 9% (against 11% earlier) for the preceding two completed years and the accounting year for which it proposes to declare dividend; and have net non-performing assets (NPA) of less than 7% (3% earlier).
| Bank stocks perk up on reform move | |||||||
| The effects of the banking reforms cleared by the Centre late on Wednesday were visible on the stock markets on Thursday. On BSE, Bankex outperformed Sensex and ended the day with highest gains among all the sectoral indices. More from Front Page
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