The Reserve Bank of India (RBI) on November 28, 2025 issued the Reserve Bank of India (Payments Banks – Prudential Norms on Declaration of Dividend) Directions, 2025, prescribing prudential norms for declaration and payment of dividends by Payments Banks. The Directions are applicable to all licensed Payments Banks and provide a framework for Board oversight, eligibility criteria, quantum of dividend payable, and reporting requirements. They are aimed at ensuring that dividend distribution is aligned with the bank’s financial health, regulatory compliance, and long-term sustainability.
Under the Directions, a bank’s Board must consider interim dividends already paid, audit qualifications, supervisory findings on asset quality and provisioning, minimum regulatory capital requirements, and the bank’s growth plans while approving dividend proposals. The Board must also assess the current and projected capital position, capital buffers, adequacy of provisions, and economic and profitability outlook before recommending dividend distribution.
Eligibility to declare dividends requires a minimum CRAR of 9% for the preceding two financial years and the current year, a NNPA ratio below 7%, compliance with statutory provisions under the Banking Regulation Act, 1949, adherence to RBI guidelines on capital, provisions, and statutory reserves, and absence of any RBI-imposed restrictions. Banks meeting these criteria may declare dividends out of current year profits, subject to a maximum dividend payout ratio of 40%. Reporting formats and compliance requirements are specified for transparency and monitoring.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/217 DOR.ACC.REC.136/ 21-02-067/2025-26]
