KATHMANDU – Banks and financial institutions can distribute dividends from the interest accounted for in the last financial year 2080/81 on the accrual basis if they are received within July 2081. On Monday, the Bank and Financial Institutions Regulation Department of the National Bank issued a circular and gave this instruction. This time, until the middle of July, the dividend can be distributed only from the interest received up to 15 July.

According to Nepal Financial Reporting Standard (NFRS), the accrued interest should be reported as income even if it is yet to be collected. Income tax payments and employee bonuses are also distributed on the same basis. However, while stopping the distribution of dividends, the National Bank has stipulated that it should be kept in the regulatory reserve. After the interest is raised, it can be written back to the accumulated profit and distributed as dividends.

This time, if such interest accrued up to last June is collected within July, it will be shown in the financial statement of last June and accounted for in the profit that can be distributed from last year’s profit (accumulated profit). In the case of microfinance financial institutions where NFRS is not applicable, if the interest accrued in 2080/81 is received before the middle of July 2081, such microfinance financial institutions will be allowed to declare income in the profit and loss account of 2080/81.