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The HDFC Bank’s board of directors will be meeting on Friday, June 18 to decide on a recommended proposal to give a dividend to the bank’s equity shareholders. The information was revealed by HDFC bank in an exchange filing. The dividend will be for the financial year 2020-21.
In the filing, the bank informed the exchanges that a decision on dividend would be taken after taking into account the RBI’s new notification on the declaration of dividends by banks. HDFC Bank also announced the closure of trading of the bank’s securities for designated employees, directors, among others. This is in accordance with market regulator SEBI’s Prohibition of Insider Trading Regulations, 2015 and the Bank’s Share Dealing Code, it added.
It may be recalled that the Reserve Bank of India(RBI) had, in a notification dated 22 April, asked all banks in the country to restrict the amount given as dividends to 50%. the decision was taken to ensure that banks remained resilient and conserved their capital in view of the rampant spread of the second wave of COVID-19 infections. “In view of the continuing uncertainty caused by the ongoing second wave of covid-19 in the country, it is crucial that banks remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses,” the central bank had then said.
However, cooperative banks were given an exception to the new rule as RBI allowed them to pay dividends from the profit generated in the financial year ending in March 2021.
This is the second consecutive year when RBI has put up restrictions on the payout of dividends for the banking sector. Last year, with the onset of the pandemic, the banking regulator had barred the banks from paying any dividend for the financial year 2019-20.