NRB Bars Payment Companies from Issuing Dividends Without Meeting Reserve Requirements
NRB’s new directive mandates that licensed payment companies must first fund risk, reserve, and infrastructure development pools before distributing dividends.
The Nepal Rastra Bank (NRB) has introduced a stricter regulatory framework for dividend distribution among licensed payment service providers (PSPs). As per the "Dividend Distribution Guideline 2082" issued on Sunday, companies in the payment ecosystem must ensure that specific funds are adequately capitalized before declaring any form of dividend.
The circular requires PSPs to allocate funds into the Risk Bearing Fund, General Reserve Fund, and Infrastructure Development Fund. Only after these financial safeguards are met can companies proceed with issuing cash or stock dividends to shareholders.
The guideline further outlines that dividend policies must be crafted in a manner that:
Supports the maintenance of regulatory capital
Encourages business continuity
Enhances risk absorption capacity
Aligns with the company’s long-term capital plan
Dividend declarations must include policies governing both cash and stock payouts. Additionally, companies must adhere to the following mandatory compliance conditions:
Retained earnings must not be negative
Dividends can only be declared based on profit in the respective fiscal year
Cash dividends from share premium or bargain purchase gains are not allowed
Net worth must remain positive
This directive reflects NRB’s increased focus on safeguarding systemic liquidity, preserving shareholder equity, and ensuring stability in the rapidly growing digital payments sector.