On Friday, the Reserve Bank of India (RBI) has asked scheduled commercial banks and co-operative banks not to make any dividends for the financial year ending March 2020 and said it will review this stand on the basis of the financial positions of the banks for the quarter ended September 2020. RBI Governor Shaktikanta Das today said this was being done to conserve cash in view of the challenges posed by covid-19.
‘It is imperative that banks conserve capital to retain their capacity to support the economy and absorb losses in an environment of heightened uncertainty,’ RBI Governor Shaktikanta Das said in his address while announcing several steps to improve liquidity, particularly for non-banking finance companies (NBFCs).
The central bank cut the reverse repo rate by 25 basis points to 3.75 per cent even as it kept the repo rate unchanged at 4.4 per cent, the increased spread between the two key policy rates meant to tell the banks to not park their money with the central bank and instead lend more to corporate and individuals.
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