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SBP advises Banks to suspend distribution of dividend for 1QCY20 and 1HCY20

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April 22, 2020 (MNL): The State Bank of Pakistan has advised Banks/DFI/MFB to suspend distribution of profits by way of declaring dividends in any manner (cash or stock) for the quarter ending March 31, 2020 and half year ending June 30, 2020, with a view to conserve capital and further enhance the lending and loss absorption capacity.

According to the circular issued by SBP in this regard, these instructions will not be applicable on dividend declared for the year ended December 2019.

Lest the Board of any Banks/DFI/MFB considers it necessary to declare the dividend in wake of the institution’s specific circumstances, it may approach SBP with sound justifications for consideration of request on merit.

State Bank of Pakistan will review the above instructions on distribution of dividends after June 30, 2020 keeping in view the severity and impact of the COVID-19 and economic dynamics on the safety and soundness of the banking system

‘To mitigate the impacts of COVID-19 pandemic, SBP announced a host of regulatory relief measures. These measures, among others, include lowering the Capital Conservation Buffer (CCB) and relaxation of criteria for rescheduling/restructuring of loans. The aim of these regulatory reliefs is to boost the lending capacity of the banks, avoid any adverse impact on their asset quality and to ensure a continuous flow of credit to support the economic activity in these pressing times’ the circular added.

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Posted on: 2020-04-22T17:08:00+05:00

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