State Bank of Pakistan today announced suspension of any cash or stock dividends for March and June quarters. SBP took the step in wake of current economic crisis and create cash support for banks. The instructions are in line with the recent economic relief announcement made by Federal government to tackle the issues faced by industries in Pakistan.
SBP provides new refinance schemes and moratorium on Loans
After the announcement of federal government’s relief package on 26th March 2020, State Bank introduced various policies to provide relief to industrial sector and small businesses. SBP allowed moratorium of up to 1 year on loans taken under the concessional refinance schemes. The borrowers of refinance schemes and their Sharia’h alternatives are also provided relaxation in loan payments to deal with coronavirus outbreak.
In monetary policy announced on 17th March, SBP introduced various subsidized loans for industries and healthcare institutions to cope with coronavirus outbreak.
Banks required to increase their lending capacity
State Bank has placed requirements for banks to lower the Capital Conservation Buffer (CCB) to boost lending capacity and ensure continuous flow of credit. SBP now requires suspension of any cash or stock dividend to its investors for March and June 2020.
The economic relief package announced to handle the economic crisis in Pakistan has put finance ministry under great stress. SBP requires commercial banks to provide relief to small and medium investors. Such loans can negatively affect asset quality of banks. It is significant for banks to preserve cash at this time. State Bank requires full participation of commercial banks in providing relief to industry.
SBP also emphasizes that in case any commercial bank has to distribute dividends under some regulatory or company policy, they can submit written applications for half yearly June dividends.