RBI Draft Norms Cap Bank Dividend at 75% of PAT
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- Last Updated on 8 January, 2026
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PR no. 2025-2026/1866; dated: 06.01.2026
1. Introduction
The Reserve Bank of India (RBI) has issued draft directions proposing a cap on dividend payouts by banks, limiting distributions to a maximum of 75% of net profit. The proposal was released vide Press Release No. 2025-2026/1866 dated 06-01-2026.
2. Proposed Dividend Framework
Under the draft directions, RBI has proposed a revised methodology for computing the maximum eligible dividend payout. The term “dividend” has been defined to include interim dividends payable on equity shares, while expressly excluding dividends on Perpetual Non-Cumulative Preference Shares.
3. Concept of Adjusted Profit After Tax
The RBI has introduced the concept of “Adjusted Profit After Tax (PAT)”, which shall be calculated as the PAT of the relevant financial year minus Net NPAs as on March 31 of that year. The proposed 75% cap on dividend payouts will be applied on this adjusted PAT figure.
4. Reporting and Compliance Requirements
Banks declaring dividends or remitting profits to their Head Office will be required to submit a report in the prescribed format to the Department of Supervision of the RBI. This report must be furnished within a fortnight from the date of dividend declaration or profit remittance.
5. Conclusion
The proposed cap on dividend payouts is aimed at strengthening banks’ capital buffers and promoting long-term financial stability. RBI has also reserved the right to impose restrictions on dividend distribution or profit remittance in cases of non-compliance with applicable laws and regulatory guidelines.
Click Here To Read The Full Press Release
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