RBI Seeks Public Feedback On Revised Bank Dividend & Profit Remittance Framework

(MENAFN- KNN India) New Delhi, Jan 7 (KNN) The Reserve Bank of India (RBI) has invited comments on the draft 'Prudential Norms on Dividend and Remittance of Profit' Directions, 2026, which propose a revised framework for the declaration of dividends and remittance of profits by banks in India.

The draft has been released for public consultation until February 5, 2026, with feedback to be submitted via the 'Connect2Regulate' section on the RBI website.

Background and Objective

The draft Directions follow a review of the existing prudential norms governing dividend declaration and profit remittance by foreign banks operating in branch mode in India.

An earlier draft was issued for comments on January 2, 2024, and stakeholder feedback has been incorporated into the current draft. The revisions propose a new methodology for calculating the maximum eligible dividend payout.

Coverage Across Bank Categories

The draft Directions apply across multiple banking categories, encompassing commercial banks, small finance banks, payment banks, regional rural banks, and local area banks.

Key Provisions

Under the draft Directions for commercial banks, a bank will be permitted to declare dividends or remit profits only if it satisfies certain prudential conditions.

These include maintaining compliance with regulatory capital requirements at the end of the previous financial year and ensuring that capital remains above the prescribed level throughout the year of the proposed dividend payout.

Additionally, banks incorporated in India must report a positive adjusted Profit After Tax (PAT) for the relevant period, while foreign banks operating through branches must have a positive PAT for the period for which profits are to be remitted.

Similar prudential conditions are being proposed for Small Finance Banks, Payment Banks, Regional Rural Banks, and Local Area Banks, requiring compliance with regulatory capital norms both before and after dividend distribution, ensuring a positive adjusted profit after tax for the relevant financial year, and confirming that no existing restrictions on dividend declaration have been imposed by the RBI or any other authority.

(KNN Bureau)

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