The directions mandates strong board oversight, requiring consideration of asset quality divergences, audit qualifications, capital adequacy, and long-term growth plans before declaring dividends. The eligibility for dividend pay-out depends on continuous compliance with regulatory capital requirements, positive adjusted Profit After Tax (PAT) after deducting net NPAs, and absence of regulatory restrictions. Dividends are capped at 75% of PAT and further linked to Tier 1 capital ratios through a graded bucket system, incentivising stronger capitalization. The directions prohibit dividend distribution from exceptional or unrealised gains and require deductions where audit reports indicate overstatement of profits.
(Link: Press Release RBI Draft Directions Dated 06/01/2026)
(Link: For Small Finance Banks RBI Draft Directions Dated 06/01/2026)
(Link: For Payment Banks RBI Draft Directions Dated 06/01/2026)
(Link: For Regional Rural Banks RBI Draft Directions Dated 06/01/2026)
(Link: For Local Area Banks RBI Draft Directions Dated 06/01/2026)