Kamana Sewa Bikas Bank Declares 15.78% Dividend for FY 2024/25
8th September 2025, Kathmandu
Kamana Sewa Bikas Bank Limited has announced a dividend payout of 15.7895 percent for the fiscal year 2024/25, making it the first development bank to do so this year.
Kamana Sewa Bikas Bank Declares Dividend
The dividend package, approved by the bank’s Board of Directors, consists of 10 percent in bonus shares and 5.7895 percent in cash dividends (including the amount for tax). This decision, however, is not final and is contingent upon approval from the Nepal Rastra Bank (NRB), the central bank, and a subsequent endorsement by the bank’s shareholders at its upcoming 19th Annual General Meeting (AGM). This announcement signifies a continuation of the bank’s consistent track record of rewarding its investors, as it follows a 12 percent dividend distribution in the previous fiscal year, 2023/24.
Understanding the Dividend Payout
The dividend payout by a company, especially a bank, is a key indicator of its financial health, profitability, and commitment to its shareholders. The dual nature of Kamana Sewa’s dividend—a combination of bonus shares and cash—is a common practice in Nepal’s financial sector. This strategy is designed to offer a balanced return to investors while also strengthening the bank’s capital base.
A bonus share is an additional share given to existing shareholders at no cost, essentially converting a portion of the company’s accumulated profits and reserves into share capital. This increases the total number of shares outstanding, and while the total value of a shareholder’s investment remains the same in theory, the increased number of shares can lead to greater liquidity in the market. This move is often favored by companies that want to conserve cash for strategic investments, expansion plans, or to comply with capital adequacy requirements set by the central bank. For the shareholder, receiving bonus shares increases their total shareholding, which can lead to higher dividends and greater capital gains in the future.
The cash dividend component, on the other hand, is a direct payout of a portion of the bank’s earnings to shareholders. The 5.7895 percent cash dividend, which includes the tax on the bonus shares, provides immediate income to shareholders. This combination of bonus shares and cash provides a dual benefit: long-term growth through increased shareholding and immediate liquidity through a cash payout. It signals to the market that the bank is not only profitable but also confident in its future earnings, as it’s able to distribute cash while simultaneously strengthening its capital structure through bonus shares.
The Approval and Implementation Process
The declaration of the dividend by the bank’s board is the first step in a multi-stage process. As is the standard regulatory practice in Nepal, any dividend proposal from a bank or financial institution must first be approved by the central bank, Nepal Rastra Bank (NRB). The NRB’s approval is based on several factors, including the bank’s financial health, its capital adequacy ratio, non-performing loan (NPL) ratio, and overall compliance with central bank directives. This rigorous review process ensures that a bank’s dividend distribution does not compromise its stability or solvency. Once the NRB gives its stamp of approval, the proposal is then presented to the bank’s shareholders at its Annual General Meeting (AGM) for a final endorsement. Only after a majority of shareholders vote in favor of the proposal can the dividend be officially distributed. This process serves as a critical check and balance, ensuring that the interests of both the financial system’s stability and the shareholders are protected.
Kamana Sewa Bikas Bank’s early declaration of the dividend for the fiscal year 2024/25 is notable as it sets a benchmark for the development banking sector. This proactive approach underscores the bank’s strong financial performance and its commitment to transparency. Its consistent track record, with a 12 percent dividend payout in the previous fiscal year, further builds investor confidence. This steady performance reflects sound financial management and a focus on sustainable growth, which are crucial for a development bank operating in Nepal’s competitive financial landscape. Kamana Sewa Bikas Bank, as a national-level development bank, plays a vital role in providing a wide range of banking services across the country, and its robust performance contributes to the overall stability and growth of the financial sector.
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