KARACHI: The State Bank of Pakistan (SBP) has directed commercial banks to suspend their dividends “for the quarter ending March 31, 2020 and half year ending June 30, 2020”, according to a circular issued Wednesday.
The central bank’s directives were aimed at helping banks, microfinance companies, and development finance institutions (DFIs) “conserve capital and further enhance the lending and loss absorption capacity”. The advisory was not applicable on yearly dividends for the period ending December 2019.
If, however, a bank’s board of directors deem it necessary to declare dividends, they were advised to “approach SBP with sound justifications for consideration of request on merit”.
The SBP added that it would review the latest directives further after June 30, 2020, in light of the coronavirus pandemic’s additional effects on the economy and how secure and stable the banking system is at that time.
It has previously relaxed loan payments for a year in some cases, lowered the policy rate — in three consecutive cuts — to 9%, and offered lending at slashed rates to contain mass layoffs. It also reduced the capital conservation buffer (CCB).