DOS Circular No. 01: Dividend Declaration Policy for Banks

Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh

DOS Circular No. 01 Date:

To: Managing Director / Chief Executive Officer All Scheduled Banks operating in Bangladesh.

Dear Sir,

Dividend Declaration Policy against Shares.

In order to enable banks to contribute appropriately to the nation's economy by addressing the overall pressure on the banking sector caused by the coronavirus pandemic in Bangladesh and worldwide, it has been felt necessary to maintain adequate liquidity by keeping bank profits distributed to the maximum extent possible and strengthening and consolidating the capital structure. Accordingly, the Dividend Declaration Policy against Shares for banks was issued via DOS Circular No. 01 dated February 07, 2021, and DOS Circular Letter No. 07 dated March 16, 2021, which has been in effect from December 2020 until now.

2. Considering the current sub-sector situation of the country's banking sector, the protection of depositors' interests, the financial capacity of banks, and the return on investment for shareholders, the following guidelines are instructed to be followed regarding the distribution of dividends against shares of banks:

(a) Essential conditions to be strictly complied with for dividend distribution: (1) Proper compliance with Section 22 and Section 24 of the Companies Act, 1994 (amended up to 2023) and relevant instructions issued by Bangladesh Bank from time to time must be ensured; (2) Cash dividends shall be paid only from the profit of the current fiscal year; no cash dividend shall be distributed from previously accumulated profits; (3) Penalty interest and fines imposed due to ICR (Income Compliance Rate) and DCR (Deposit Compliance Rate) deficits shall not remain unpaid; (4) The ratio of classified loans and investments of the bank shall not exceed 10% of total loans and investments; (5) There shall be no funding deficit against loans, investments, and other assets; (6) If any special facility is availed from Bangladesh Bank to meet expenses including provision maintenance and other costs, no dividend shall be declared while the availed special facility remains in place.

(b) Maximum Dividend Payout Ratio: The amount of declared dividend for banks fully complying with the conditions mentioned in paragraph 02(a) shall be determined by the Maximum Dividend Payout Ratio. In this context, Maximum Dividend Payout Ratio refers to the ratio of the amount of declared dividend of the bank to the post-tax profit of the bank. That is,

Maximum Dividend Payout Ratio = (Amount of Declared Dividend / Post-tax Profit of the Considered Year) x 100%

Page-2 Department of Off-Site Supervision 13 March, 2025 AD

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3. Banks fully complying with the conditions mentioned in paragraph 02 may distribute dividends against shares as follows; however, the amount of declared dividend shall in no case exceed 30% (thirty percent) of paid-up capital:

(a) Banks that, after meeting expenses including provision maintenance, are able to maintain a minimum capital conservation of 15.0% along with a 2.5% Capital Conservation Buffer against risk-weighted assets, may distribute cash and stock dividends according to their capacity. In such cases, their Maximum Dividend Payout Ratio shall not exceed 50%, and the post-dividend capital adequacy ratio (capital conservation ratio against risk-weighted assets) shall in no case fall below 13.5%;

(b) Banks that, after meeting expenses including provision maintenance, are able to maintain capital conservation of more than 12.5% but less than 15.0% along with a 2.5% Capital Conservation Buffer against risk-weighted assets, may distribute cash and stock dividends according to their capacity. In such cases, their Maximum Dividend Payout Ratio shall not exceed 40%, and the post-dividend capital adequacy ratio (capital conservation ratio against risk-weighted assets) shall in no case fall below 12.5%;

(c) Banks whose capital conservation ratio against risk-weighted assets is less than 12.5% but more than the minimum required capital (10%) after meeting expenses including provision maintenance may declare only stock dividends according to their capacity.

4. Banks distributing dividends under this policy must submit a report to the Department of Off-Site Supervision (Division-2) of Bangladesh Bank in the format provided in 'Appendix-A' within 07 (seven) days of dividend declaration, signed by the Managing Director/CEO.

5. This policy shall apply to banks for dividend declaration for the year ending December 31, 2025. In this regard, the instructions of DOS Circular No. 01 dated February 07, 2021, and DOS Circular Letter No. 07 dated March 16, 2021, shall be considered repealed from December 31, 2025.

6. For dividend declaration for the year ending December 31, 2024, only the instructions of paragraph 2(a) of DOS Circular No. 01 dated February 07, 2021, and DOS Circular Letter No. 07 dated March 16, 2021, shall remain in force. However, the instructions of paragraph 2(b) of DOS Circular No. 01/2021 shall be considered cancelled; that is, banks availing special facilities from Bangladesh Bank to meet expenses including provision maintenance shall not be able to distribute any dividends for the year ending December 31, 2024.

7. These instructions are issued under the powers conferred by Section 45 of the Companies Act, 1991.

Yours faithfully,

(A. N. M. Moinul Kabir) Director (DOS) Phone: 9530314

Appendix-A Report on Dividend Declaration (According to Audited Financial Statements)

Name of the Bank - Account Year -

1. Total Loans/Investments and Advances: ..................... Crore Taka
2. Total Classified Loans/Investments and Advances: ..................... Crore Taka
3. Ratio of Classified Loans/Investments (%):
4. Paid-up Capital: ..................... Crore Taka

ICR (%) DCR (%) Post-tax Net Profit of the Considered Account Year (Crore Taka) Rate of Declared Dividend (%) Amount of Declared Dividend (Crore Taka) Maximum Dividend Payout Ratio (%) Post-dividend ICR (%)

Managing Director and CEO