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Nepal Rastra Bank has issued 'Guidelines on Dividend Distribution for Organizations Permitted to Perform Payment Related Activities, 2082'. Kiran Pandit, Executive Director of Nepal Rastra Bank informed that the guidance was issued with the intention of making dividend distribution transparent and orderly.
The central bank has made a new arrangement with the aim of making the distribution of earned profits and dividend distribution more transparent and systematic.
It is believed that through the implementation of this guidance, the distribution and reinvestment of the profits earned by the organizations will be more effective and the risk-bearing capacity and efficiency of the related organizations will increase and it will help in the development of a safe, healthy and efficient payment system .
Based on the guidance of the central bank, the policy on dividend distribution should be formulated and implemented. Such a policy should be passed by the Board of Directors. In relation to maintaining the regulatory capital, details of the organization's plans and priorities, policy on cash dividends and share dividends, the licensed organization must arrange risk-bearing funds and reserve funds .
A certain percentage of profit should be set aside in such funds and the funds can be used for the management of losses caused by unexpected events. Details of expenditure from the fund should be reported to the Central Bank. According to the
guidance, the payment system operator will have to arrange for infrastructure development fund and deposit a certain percentage of the profit into the fund . The amount of such funds can be spent on the infrastructure expansion of the institution . When declaring dividend, if the accumulated profit is not negative, the dividend should be declared only on the basis of the financial statement of the year in which the organization is in profit .
It is said that when declaring cash dividend, there should be sufficient cash balance, the conditions related to the loan should not restrict the dividend distribution.
