Indian Bank falls over 3.5% after it cancels dividend of Rs 6/share

As per RBI circular, the following options were given in respect of MTM (mark to market) losses and additional liability on Gratuity:

• Option to spread 'mark to market' loss on AFS & HFT investments for quarter ended December 31, 2017 and March 31, 2018, equally over the four quarters commencing with the quarter in which the loss is incurred.

• Permitted Banks to spread additional liability on account of the enhancement in gratuity limit from Rs 10 lakh to Rs 20 lakh from March 29, 2018 under Payment of Gratuity Act, 1972, over four quarters beginning with the quarter ended March 31, 2018.

“The bank has exercised the options during the quarter ended 31.03.2018 and deferred the gratuity expenditure of Rs 24.33 crore to subsequent three quarters and spread the MTM losses of total Rs 547.01 crore to subsequent quarters (after providing for December 2017 and March 2018). Considering the above, the matter was taken up with appropriate authorities seeking permission for declaration of dividend. RBI has informed that Bank can declare dividend after fully providing for MTM loss, Gratuity and any other provisions staggered in terms of dispensation given by RBI to all the banks,” the bank said in a filing to the exchanges.

The stock has fallen over 12 percent in the past six months, while in the past three days, it has fallen around 3 percent. At 10:51 hrs Indian Bank was quoting at Rs 337.70, down Rs 9.80, or 2.82 percent, on the BSE.