The Reserve Bank of India (RBI) on November 28, 2025 issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2025, laying down uniform prudential criteria and governance standards for dividend declaration by commercial banks and for profit remittance by foreign bank branches operating in India. These norms aim to ensure that distribution of profits does not compromise banks’ capital adequacy, asset quality, or financial stability.
The Directions prescribe board-level oversight, minimum prudential thresholds—such as CRAR, NNPA limits, compliance with regulatory capital buffers, provisioning standards, and adherence to statutory reserve transfers—before a bank may declare dividends. They also outline computation of dividend payout ratios and prohibit dividend payments out of accumulated reserves or extraordinary income. For foreign bank branches, the Directions clarify conditions and reporting formats for remittance of profits to head offices, ensuring transparency and prudent supervisory monitoring.
Overall, the framework strengthens capital preservation, promotes responsible distribution practices, and aligns payout decisions with supervisory findings, long-term growth needs, and financial soundness.
[Notification No. RBI/DOR/2025-26/168]
