RBI Caps Bank Dividends at 75 Per Cent of Profits Starting FY 2026-27
Mumbai, March 10 – The Reserve Bank of India has announced a new ceiling on dividend payouts by banks, limiting them to a maximum of 75 per cent of profit after tax (PAT), effective from the financial year 2026-27.
The central bank released the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividend and Remittances of Profits) Directions, 2026, following extensive consultations with industry stakeholders.
Under the new norms, banks must ensure that their regulatory capital remains above the required threshold even after dividend payments. Additionally, foreign banks operating in India through branches must record a positive PAT for the period before remitting profits to their Head Office.
The RBI clarified, "A bank may declare and pay dividends up to the limits prescribed, but in aggregate, not exceeding 75 per cent of the PAT for the period for which the dividend is being proposed."
The guidelines also extend to small finance banks, local area banks, payment banks, and regional rural banks, setting clear prudential norms for dividend declarations across the banking sector.
These measures aim to balance shareholder returns with financial stability, ensuring that banks maintain sufficient capital buffers while distributing profits.
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.
Last edited by a moderator: