B Mirror Report : 18 stock market-listed banks have been prohibited by Bangladesh Bank from reporting and paying dividends because of financial difficulties and a lack of funds. Dividend payments from these institutions will be impossible for the fiscal year that ends on December 31, 2024.

Citing Section 22 of the Bank Companies Act, 1991, the direction was provided in a letter dated May 21. Bangladesh Bank claims that there is a lack of provisioning and that the banks in question are in poor financial standing.

The banks under the ban are

AB Bank, Al-Arafah Islami Bank, Exim Bank, First Security Islami Bank, Global Islami Bank, IFIC Bank, Islami Bank Bangladesh, Mercantile Bank, NRB Bank, NRB Commercial Bank, Premier Bank, Social Islami Bank, SBAC Bank, Southeast Bank, Standard Bank, Union Bank, United Commercial Bank (UCB) and Rupali Bank.

Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan said that dividend distribution has been strictly prohibited for banks that have taken ‘deferral facility’ to meet provision deficit.

Provision deficit and extension of time limit

The banks under the ban failed to finalize their annual financial reports by the stipulated time of April 30 due to provision deficit. As a result, Bangladesh Bank extended the deadline to May 31 with the approval of the government. At the same time, additional time has been given to preserve provisions.

New instructions and future restrictions

The Bangladesh Bank letter also said that the information on provision deficit should be clearly mentioned in the financial statements of the banks for 2024. In addition, profit and loss, capital adequacy and other deficit issues should also be presented in detail.

It has also been ordered to submit a time-bound and realistic action plan approved by the board within one month. If any inconsistencies are found in the audited financial reports and the submitted information, action will be taken under the Bank Companies Act.

In addition, from 2024, banks that take the deferral facility to preserve provisions will be prohibited from paying dividends. In addition, similar restrictions will apply to banks that have more than 10 percent of their total loans in default in the future.

BAB’s response

Bangladesh Association of Banks (BAB) Chairman Abdul Hai Sarkar expressed concern over the decision. He said, “The basis of public trust in banks is depositors, shareholders and customers. If dividends are stopped, this trust can crack.” He said that despite several discussions with Bangladesh Bank to lift the ban, they have not budge from their position.

Banks that have declared dividends

Out of 36 banks listed on the stock market, 16 have finalized their annual financial reports and declared dividends within the stipulated time so far. These include: DSE stock quotes

City Bank, BRAC Bank, Pubali Bank, Uttara Bank, Eastern Bank, Prime Bank, NCC Bank, Dutch-Bangla Bank, Mutual Trust Bank, Bank Asia, Jamuna Bank, Shahjalal Islami Bank, Trust Bank and Midland Bank.

One Bank has not declared a dividend despite making a profit. On the other hand, Dhaka Bank has declared a dividend at the last minute with the permission of the central bank.