RBI Draft: Bank Dividend Payout Cap Raised to 75%
Why in the news
A draft RBI framework would let banks share more profit with shareholders, subject to strong capital, asset quality and provisioning.
Key facts
- Covers Indian banks and foreign banks in branch mode.
- Adjusted net profit equals net profit minus net NPAs.
- CET1 is the top-quality capital that first absorbs losses.
| CET1 level or bank | Dividend position |
|---|---|
| Below 8% | None allowed |
| Above 20% | Up to 100% of adjusted profit, within 75% cap |
| SBI (D-SIB) | 20.8% for maximum payout |
| HDFC Bank (D-SIB) | 20.4% |
| ICICI Bank (D-SIB) | 20.2% |
Other proposals
- Boards must weigh asset quality, provisioning gaps, capital projections and growth plans.
- Profit overstatement and exceptional income are excluded; modified audit opinions trigger downward adjustment.
- Foreign branches may remit surplus without prior RBI approval; excess found in audit must be refunded.
Exam angle
- Cap moves 40% to 75%.
- Related terms: D-SIB, CET1.