A bank won’t be able to pay dividends if its non-performing loan (NPL) rate is 10 percent. Dividend payments under this scheme will begin in 2025. Bangladesh Bank recently released a policy on the subject.

Bangladesh Bank has been restricting dividend distribution since 2020 due to Corona. Until now, there were various restrictions on dividend distribution by banks that had taken deferral facility only for preserving provisions. This time, many new conditions have been added.

The policy states that a bank can only pay cash dividends from the profit of the calendar year in question. Cash dividends cannot be distributed from accumulated profits in any way. In this case too, some more conditions have to be followed. If the classified loan rate of a bank is more than the maximum 10 percent, it will not be able to pay dividends. There cannot be any resource deficit against loans, investments and other assets. Again, if the penalty interest and fine imposed due to CRR and SLR deficiency are unpaid, dividends cannot be paid. Dividends cannot be paid while the deferral facility from Bangladesh Bank is in force to meet other expenses including provisioning. In this case, sections 22 and 24 of the Bank Company Act must be properly complied with.

The list of banks with more than 10% loan defaults includes National Bank, ICB Islamic Bank, Union Bank, IFIC Bank, Social Islami Bank, Rupali Bank, Global Islami Bank, First Security Islami Bank, AB Bank, Islami Bank, United Commercial Bank, One Bank and Bank Asia.

It should be noted that this policy of Bangladesh Bank will be applicable to the declaration of dividend for the year ended this year. For dividends for the year ending 2024, the instructions of 2021 will have to be followed. However, the opportunity provided in that instruction to pay 5 percent stock dividend to banks that have taken deferral has been canceled. As a result, banks that have taken deferral facility will not be able to distribute any dividend for the year 2024.