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In the face of the Covid-19 crisis, the RBI had disallowed all the banks from declaring any dividend for FY20.
Shares of select banking players traded higher on Friday after the Reserve Bank of India on Thursday allowed commercial banks to pay dividends for FY21, subject to certain conditions and limits.
With a rally of 4%, City Union Bank was the top performer in the BSE Bankex. It was followed by Axis Bank (up 2.17%), IndusInd Bank (up 1.53%), RBL Bank (up 1.47%) and Bandhan Bank (up 1.13%). Federal Bank and Kotak Mahindra Bank also traded in the green with marginal gains.
The revised circular from the RBI provides that commercial banks can pay up to 50% of what they could pre-Covid. For co-operative banks, all the restrictions on dividends have been removed.
In the face of the Covid-19 crisis, the RBI had disallowed all the banks from declaring any dividend for FY20, as the focus shifted to conserving capital amid the uncertain environment.
All banks have been advised to be cautious taking into account the adequacy of provisions and economic environment while considering dividend on equity shares, the central bank clarified.
On the other hand, ICICI Bank, HDFC Bank and SBI were down between 0.25% and 1.40% at around 2.15 pm (IST). On the other hand, the benchmark BSE Sensex was down 0.18% at around the same time.