Co-operators associated with cooperative banks and urban cooperative banks have welcomed the decision of the Reserve Bank of India allowing them to pay dividend on equity share to their shareholders from the profit of the financial year ended 31st March 2021 as per the extant instructions.
Talking to Indian Cooperative Chairman of the apex body of UCBs, Jyotindrabhai Mehta welcomed the move and said Nafcub has been demanding the same for a long time. “In the context of allowing UCBs to make dividend payout, we had written many letters to the RBI”, Mehta recalled.
“We are happy that finally the RBI has allowed the UCBs to pay out dividends to the shareholders. I welcomed the decision which is commendable and in the interest of co-op banks”, concluded Mehta.
Hailing the decision of RBI, Maharashtra Urban Cooperative Banks Federation Chairman Vidyadhar Anaskar said, “Finally, the apex bank has allowed UCBs to make dividend payout for the financial year 2020-21. It will help the shareholders in a big way as all of us are facing one of the worst pandemics and money is needed the most”, Anaskar underlined.
“Besides, we urge UCBs to disburse maximum dividend permissible in the law since in the last financial year also co-op banks could not pay dividends due to RBI’s embargo. It bears recall that RBI has disallowed payment of dividends in the 2019-20 FY”, added Anaskar.
“The total share capital of all UCBs in the country is Rs 13,000 crores. Of that the share capital of ‘A’ & ‘B’ rated UCBs is approximately Rs 9000 crore. If we calculate at least 10% dividend on such a share amount, it comes to hardly Rs. 900 crore”, he asserted.
RBI Central Board Director and Sahakar Bharati’s founder member Satish Marathe said “this is a Welcome Decision for all Shareholders, particularly for Shareholders of Co-Op Banks!”
Reacting to the development, Nafscob Chairman Ravindra Rao said, “It is a good move. This decision will ultimately strengthen the PACCs which are the direct members of DCCBs. It will ultimately help the farmers. There are 33 State Co-op Banks and more than 350 DCCBs in the country and all of them are relieved by the decision”, he added.
In a notification to all the commercial and co-operative banks RBI wrote “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.”
RBI further added “Cooperative banks shall be permitted to pay dividend on equity shares from the profits of the financial year ended March 31, 2021 as per the extant instructions.