B Mirror Report:  Bangladesh Bank has imposed new restrictions on cash dividend distribution by banks in a move aimed at strengthening the capital base of the country’s banking sector.

According to the new directive, banks with paid-up capital below Tk 2,000 crore will not be allowed to declare any cash dividend from this year onward.

The central bank issued a circular in this regard on Saturday (May 23), stating that the decision was taken considering both global and domestic economic conditions and the need to enhance the financial resilience of banks.

The circular also said that banks eligible to declare cash dividends under existing regulations will be allowed to distribute a maximum of 50 percent of their total declared dividend in cash. The remaining portion must be issued as stock dividends.

Bangladesh Bank said the new instruction will be effective for dividends declared for the financial year ending December 31, 2026, and onwards. However, other related directives issued on March 13, 2025, will remain unchanged.

A senior official of the central bank said the initiative was taken to increase the paid-up capital of banks. The main objective of the policy is to encourage banks to retain a portion of their profits in order to further strengthen their capital base.