Kotak Mahindra Bank will be restricting the issuing of dividend on perpetual non-cumulative preference shares (PNCPS) after receiving a communication from the RBI, instructing them to do so.

On December 4, 2020, The Reserve Bank of India had issued a circular advising bank not to make any dividend payment on equity shares from the profits of the financial year which ended March 31, 2020. Furthermore, they have also clarified that the above restriction on dividend distribution will also apply to PNCPS.” Non-cumulative preference shares are those shares that provide the shareholder fixed dividend amount each year from the company’s net profit.

The non-cumulative preference shareholders have no right to claim any unpaid dividends in subsequent years. They get a fixed amount of dividend from the profits of each year. In case the company fails to declare the dividend on such preference share to the shareholder in any year then such dividend cannot be claimed by the shareholder in the future.