The Reserve Bank of India (RBI) has proposed draft rules for non-banking financial companies (NBFCs) to declare dividends. The circular states that deposit-taking NBFCs' and systemically important non-deposit taking NBFCs should have the capital to risk-weighted assets ratio of at least 15 percent for the last three years, including the accounting year for which it proposes to declare a dividend.

Ramesh Iyer, Vice Chairman and Managing Director, Mahindra and Mahindra Financial Services shared his views and outlook.

“I am not seeing it as something that is negative,” he said in an interview with CNBC-TV18.

“If you look at our CRAR, we are already much above the required norm and the last three year’s net NPA positions have been definitely below six percent and if things go the way it is going, we can even go below 4 percent,” he said.

“I am not seeing it as restrictive. I would think that companies would be looking at why give dividends and raise fresh capital. We would rather store money and increase your net worth if you have a growth opportunity. One should look at it as a guideline for NBFCs to follow in order to be able to adequately be capitalized at any point of time,” Iyer said.

“It is not going to be no dividend situation for anybody. Based on the performance, you can be under different buckets of dividends,” he mentioned.

For the entire discussion, watch the video...

(Edited by : Anshul)

First Published:Dec 10, 2020 12:04 PM IST