The Bangladesh Association of Banks (BAB), a platform representing private bank owners, on Tuesday urged the central bank to allow banks to declare dividends as before, even if they have availed deferral facilities for provisioning against default loans.
A delegation led by BAB chairman Abdul Hai Sarker met with Bangladesh Bank (BB) governor Ahsan H Mansur and senior officials to press their demand.
Several bank chairpersons, four deputy governors, executive directors, and other BB officials were also present at the meeting.
On March 13, Bangladesh Bank issued a circular imposing new restrictions on dividend declarations.
The circular states that banks must not have any shortfall in provisioning against loans, investments, and other assets to declare dividends.
It also prohibits banks that have taken deferral facilities from BB for provisioning or other expenses from issuing dividends for 2024 while such facilities remain active.
Additionally, banks with non-performing loans exceeding 10 per cent of total loans and investments are barred from declaring dividends.
BAB has urged the central bank to relax these restrictions and allow affected banks to distribute dividends as before.
Bank officials said that the chairpersons specifically requested modifications to allow banks that availed deferral benefits last year to issue dividends.
They also sought relaxation of the condition restricting banks with high default loans from paying dividends.
BAB chairman Abdul Hai Sarkar stated that while the government aims to support struggling banks by easing some policies, it is simultaneously imposing pressure, which he believes is not a sustainable approach.
He further noted that the new circular prohibits banks availing deferral benefits in 2024 from distributing dividends.
BAB proposed maintaining the previous rules and implementing the new restriction from 2025 instead. According to him, the governor agreed to this proposal.
The March 13 circular also requires banks to follow BB鈥檚 2021 dividend policy for the financial year ending in 2024.
However, a provision that previously allowed deferral-taking banks to offer a 5 per cent stock dividend has now been revoked, meaning such banks will not be permitted to distribute any dividends for 2024.
According to BB data, twelve banks faced a combined provision shortfall of Tk 1,09,151 crore at the end of December, with state-owned Janata Bank alone accounting for Tk 27,860 crore.
The shortfall stood at Tk 31,549 crore in June 2024.
