The Reserve Bank has advised banks not to make any dividend payouts from profits pertaining to the financial year ended March 2020.

In a statement, RBI said it is imperative that banks continue to conserve capital to support the economy and absorb losses, if any. In view of the COVID-19 pandemic, RBI had asked to withhold payment of dividends until September 2020.

On further review, RBI has said that conserving such payment will further strengthen banks’ balance sheets while supporting lending to the real economy.

The statement further informed that the apex bank will soon be releasing draft guidelines for Non-Banking Financial Institutions - NBFCs, who would be allowed to declare dividend as per a matrix of parameters. It said that the decision has been made in view of the increasing significance of NBFCs in the financial system and their interlinkages with different segments.

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