KATHMANDU, August 3: Nepal Rastra Bank (NRB) has removed the ceiling on the cash dividends that the banks and financial institutions (BFIs) provide to their shareholders.
The central bank has appeared flexible in this policy at a time when the BFIs are being forced to issue bonus shares from their notable amount of net profits, although they have huge paid-up capitals with them. As of now, the BFIs have been allowed to provide a cash dividend of only 30 percent of the net distributable profits to their shareholders.
If the BFIs earned a net distributable profit which was less than five percent of their paid-up capital, they were allowed to provide a cash dividend only for the tax purpose. Similarly, the BFIs had to consider the weighted interest rate of their deposits while distributing cash dividends. Amending a unified directive on Wednesday, the central bank has freed the BFIs from all these obligations.