The Directions require banks to comply with regulatory capital requirements both before and after dividend payment and to report positive adjusted Profit After Tax (PAT), calculated after deducting 50% of net NPAs. Dividend payout limits are linked to the Tier 1 capital ratio, with higher capital levels permitting higher payouts, subject to an overall cap of 75% of PAT. Extraordinary income, overstated profits identified by auditors, and certain reversals of provisions are excluded from dividend calculations. The Board must assess supervisory observations, auditors’ reports, and capital projections before declaring dividends.
(Link: RBI Directions Notification 391/2026 Dated 10/03/2026)