Nepal Rastra Bank (NRB) has stopped banks and financial institutions (BFIS) from distributing cash dividend to the shareholders from the profits earned in the last fiscal year 2014-15 considering that BFIs have to hike their paid up capital. However, they can put aside the amount for just tax purpose.

The central bank has already directed BFIs to increase their minimum paid up capital fourfold. For banks, it is Rs8 billion from current Rs2 billion, national level development banks have to hike their capital to Rs2.5 billion from current Rs640 million and the  national level finance companies have to hike their paid-up capital to Rs800 million from current Rs200 million. Likewise, limited district-level development banks and finance companies also have to hike their capital.

Issuing a working procedure on BFI that mandates taking approval for balance sheet and dividend approval 2015, the central bank asked the BFIs to put off the distribution of cash dividend and prioritise bonus share distribution considering the need for increasing the paid up capital to new level by Mid-July 2017.