The Reserve Bank of India (RBI) has withdrawn its 2025 framework on how commercial banks declare dividends and remit profits, replacing it with new directions that will take effect from FY27.
In a notification dated March 10, the Reserve Bank of India stated that it has repealed the RBI (Commercial Banks Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2025, which were initially issued on November 28, 2025.
“The Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest to do so, hereby repeals the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2025… with effect from Financial Year (FY) 2026-27,” said RBI.
The repealed framework will be replaced by the RBI (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026, which will also come into effect from FY27.
The central bank, however, clarified that actions taken under the previous framework will continue to remain valid, and any approvals or acknowledgements issued under the 2025 directions will be considered as governed by the new rules.
The RBI further stated that the repeal will not impact “any right, obligation or liability acquired, accrued, or incurred” under the previous directions. Likewise, penalties, forfeitures, or punishments arising from violations of the repealed framework will remain enforceable.
The regulator said that investigations, legal proceedings, or remedies concerning such rights, liabilities, or penalties may continue as if the 2025 directions had never been repealed.
What do final norms say?
- Dividend declaration linked to bank’s capital adequacy and CET1 ratio
- Banks with CET1 just above regulatory minimum requirement not allowed to declare dividend
- Banks with stronger capital buffers allowed higher payout flexibility within cap
- Overall dividend payout capped at 75 per cent of PAT for relevant financial year
- Actual payout linked to graded capital thresholds under new framework
- Dividend to be calculated based on ‘Adjusted PAT’ concept
- Adjusted PAT defined as PAT minus 50 per cent of net NPAs as on March 31
- Framework part of RBI’s amended guidelines on dividend declaration by banks
- New norms aim to ensure capital conservation and financial stability in banking system
