RBI Draft Dividend Norms for Banks Linked to Capital
Why in the news
RBI released draft norms to discipline dividend payouts, after banks paid over ₹75,000 crore last financial year on record profits.
Key facts
- Proposed uniform prudential framework, effective FY27.
- Aim: preserve capital buffers and keep payouts sustainable for financial stability.
| Covered | Not covered |
|---|---|
| All banking companies, corresponding new banks, SBI, foreign banks in branch mode | Small finance banks, payments banks, local area banks, RRBs |
Three conditions
- Capital adequacy: minimum capital ratios with buffers must hold before and after the payout.
- Asset quality: NPAs, provisioning and credit risk decide eligibility; stressed banks may be restricted or barred.
- Profit quality: profits must be sustainable, core-driven and well provisioned; one-off gains do not qualify.
Exam angle
- Capital Adequacy Ratio compares loss-absorbing capital with risk in assets.
- Framework applies from FY27.