Experts suggest banks should suspend dividend payment

The economy is bearing the brunt of novel coronavirus and the government is announcing packages one after another to mitigate the economic risk brought by Covid-19.

The government has also announced such stimulus package for the banking sector. But nonetheless the benefits of these packages seldom reach the pockets of the bank clients. 

But how much of these benefits will reach the clients, question remains.

A string of foreign banks have suspended their dividend and interest payments to free up capital during the market downturn caused by the coronavirus pandemic. 

Experts suggest similar strategy for Bangladesh as well. 

Yet in greater extend the economy is heavily reliant on finances from banks. These banks are the prime source of funding for various stimulus packages announced by the government for different sectors including the RMG.

Experts say at time like these when banks will need more deposits from clients. The clients on the other hand will be cashing out all their deposits to meet their financial needs and paying off their employees during the pandemic. Where do the banks go now?

Secretary General of Association of Bankers Bangladesh Limited and Managing Director of Prime Bank Rahel Ahmed observes that maintaining liquidity in the banking sector is the major task at hand. He said that the banks are there now focusing on keeping liquidity at hand rather than on profits.

Executive Director of the Centre for Policy Dialogue (CPD), Dr Fahmida Khatun, suggests that the sector which was already suffering due to various scams must be salvaged first by suspending dividend payment. She suggested the central bank can in this regard hold dialogue with the security and exchange commission and fix the right course of action for banks in the country.

The central bank on the other hand says it is considering whether this could be actually practiced in Bangladesh to mitigate the economic challenges ahead. It said that it was discussing the issue of suspending dividend with various stakeholders already.