RBI Caps Bank Dividends at 75% of PAT From FY 2026-27

Overview

• The central bank issued five Master Directions to standardize dividend and profit‑remittance rules across commercial, small finance, payments, local area and regional rural banks.
• Dividend payments must not reduce a bank’s regulatory capital below required levels, and the same test applies to interim payouts.
• The RBI kept the original timeline, declining industry requests to wait for the Expected Credit Loss framework.
• Existing norms remain in force through FY 2025-26, with the new regime taking effect in FY 2026-27.
• Foreign bank branches may remit profits only for periods with positive PAT, and boards must weigh asset‑classification divergences, audit findings and projected capital before declaring dividends.