RBI caps banks’ divinend at 75% of PAT from FY27

Mumbai: The RBI has capped the maximum dividend by banks to shareholders at 75 per cent of profit after tax (PAT), with effect from FY27. The central bank on Tuesday issued the RBI (Commercial Banks – Prudential Norms on Declaration of Dividend and Remittances of Profits) Directions, 2026.

According to the norms, the regulatory capital of the bank should not fall below the applicable regulatory capital requirement even after the payment of dividends. Also, a foreign bank operating in India in branch mode should have positive PAT for the period for which the profits are to be remitted to the Head Office.

“(A bank) may declare & pay dividend up to the limits prescribed... but in aggregate not exceeding 75 per cent of the PAT for the period for which the dividend is being proposed,” it said. The directions will come into effect from the FY27.

The RBI has also issued prudential norms on declaration of dividend for small finance banks, local area banks, payment banks, & RRBs.