Banks with capital shortfall will not be able to pay dividends: BB governor

Banks with capital shortfall will not be able to pay dividends to their shareholders, Bangladesh Bank (BB) Governor Ahsan H Mansur said today (11 November).

Central bank's Spokesperson Hosne Ara Shikha told reporters that the governor informed the decision in a meeting with 17 bank MDs today.

"The governor told them that the central bank has taken a very strict position regarding banks' payment of dividends. He said no bank can pay dividends if there is a capital shortfall. In that case, instructions have been given to inform the relevant department of Bangladesh Bank," Shikha said.

The capital shortfall of 10 private and public banks in the country rose to Tk39,655 crore at the end of December 2023, according to the Disclosures on Risk-Based Capital Adequacy (Basel III) report of the banks.

The 10 banks are state-owned Janata, Agrani, Rupali, BASIC, Bangladesh Krishi, and Rajshahi Krishi Unnayan Bank, along with private banks Bangladesh Commerce Bank, ICB Bank, National Bank, and Padma Bank.

As per international rules, banks are bound to preserve capital. According to the Basel III policy, lenders in Bangladesh need 10% of their risk-weighted assets, or Tk500 crore, whichever is higher, in preserved capital. If a bank fails to maintain the amount, it is considered to be in a capital shortfall.