The Reserve Bank of India (RBI) on Friday said that it is imperative that banks continue to conserve capital to support the economy and absorb losses if any. RBI's opinion comes in view of the ongoing stress and the heightened uncertainty on account of COVID-19.
RBI today in a statement said, "In order to further strengthen the banks’ balance sheets while at the same time supporting lending to the real economy, it has been decided, on a review, that SCBs and cooperative banks shall not make any dividend pay-out from the profits pertaining to the financial year 2019-20."
Due to Covid-19 and nationwide lockdown, RBI in April 2020 had announced that scheduled commercial banks (SCBs) and cooperative banks shall not make any dividend payouts from profits pertaining to the financial year ended March 31, 2020, until further instructions, which shall be reassessed based on financial results of banks for the quarter ending September 30, 2020.
Meanwhile, RBI in its fifth bi-monthly monetary policy opted for a status quo with repo rate unchanged at 4%.
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