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Declaration of dividends by banks - Revised Guidelines
The revised guidelines as under will be applicable to the dividends declared for the accounting year ended March 31, 2004 onwards:-
3. Interim dividend
Banks may also declare and pay interim dividends out of the relevant accounting period’s profit without prior approval of RBI if they satisfy the minimum criteria prescribed in paragraph 2(a) above, satisfy the other requirements prescribed in paragraph 2(b) above, and the cumulative interim dividend(s) are within the prudential cap on dividend payout ratio (viz. 33.33%) computed for the relevant accounting period. However, declaration and payment of interim dividends beyond this ceiling requires RBI's prior approval.
4. Banks which do not meet the eligibility criteria
In case any bank does not meet the criteria prescribed in paragraph 2(a) it should obtain the prior approval of the Reserve Bank before declaring any dividend. The requests received from these banks would be considered by the Reserve Bank on a case-to-case basis.
5. Reporting system
All banks declaring dividends should report details of dividend declared during the accounting year within a fortnight after payment of dividend(s).
In case any bank violates the above guidelines, the violation would be viewed very seriously and such violation would attract penal action under Section 46 of the Banking Regulation Act, 1949.
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