Foreign banks are also instructed to defer repatriation of profits not already declared for 2019 and 2020 until their financial statements for 2020 are finalised and audited.
The CBSL (Central Bank of Sri Lanka) has ordered local banks to delay dividends and foreign banks to defer repatriation of profits until after their 2020 accounts have been audited.
The dividend restrictions are said to be aimed at ensuring domestic banks maintain appropriate levels of liquidity and capital amid the ongoing Covid-19 pandemic.
“Every licensed bank incorporate or established in Sri Lanka shall defer payment of cash dividends until the financial statements for the year 2020 are finalised and audited by its external auditor,” the CBSL said.
Until 30 June 2021, domestic banks are also asked to refrain from buying back their own shares, increasing management allowances and payments to directors, and incurring “non-essential expenditure such as advertising, business promotions, gift schemes, entertainment, sponsorships, travelling and training”.
In addition, they are asked to “exercise extreme due diligence and prudence when incurring capital expenditure”.
Banks incorporated outside Sri Lanka are instructed to defer repatriation of profits not already declared for financial years 2019 and 2020 until their financial statements for the year 2020 are finalised and audited by their external auditor.