RBI Proposes New Dividend Norms for Banks

The RBI has proposed new guidelines capping dividends by banks at 75% of net profit, introducing a revised calculation method. Focus is on ensuring positive adjusted profit and compliance with laws. The cap for dividends by regional rural and local area banks is set at 80%.

The Reserve Bank of India (RBI) has introduced draft guidelines for bank dividends, proposing a cap at 75% of net profit while specifying a new calculation method. These guidelines stress the importance of considering long-term growth and capital when declaring dividends.

The norms require banks, including foreign branches, to ensure positive adjusted profit after tax (PAT) for the period before payout. A higher cap of 80% is suggested for regional rural and local area banks.

The RBI reserves the authority to impose restrictions on dividend distributions if banks fail to comply with regulatory requirements. Public comments on the draft are open until February 5, 2026.