RBI Asks Banks To Not Declare Dividend For FY21; Retain Profit Made In FY20

Addressing the press after the monetary policy committee meeting, the RBI governor Shatikanta Das said that commercial, cooperative banks have been asked to retain profit made in the financial year 2019-20 and not to make any dividend payment for the current financial year 2020-21.

Nifty Bank index rose nearly 2% to 29,980.40 after the announcement.

The monetary policy committee of the Reserve Bank of India (RBI) left the benchmark repo rate unchanged at 4% on Friday, in view of persistently high inflation and a lower-than-expected contraction of the economy. It has maintained its 'accommodative' stance on policy.

The committee is of the view that the inflation will likely to remain elevated with some relief from Kharif harvest.

"Project CPI inflation at 6.8 percent in Q3FY21, 5.8 percent for Q4FY21, 5.2-4.6 percent in H1FY22 with risks broadly balanced. However, expect some relief in CPI inflation in the winter months," Das said.

Sensex hit 45,000 for the first time as RBI upgraded its GDP forecast for FY21 to -7.5 percent from -9.5 percent projected earlier.