Mumbai, March 10 The Reserve Bank of India has capped the maximum dividend that banks can pay to shareholders at 75 per cent of profit after tax (PAT), effective from the financial year 2026-27.
The central bank issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividend and Remittances of Profits) Directions, 2026, on Tuesday, following consultations with stakeholders.
According to the norms, the bank's regulatory capital should not fall below the applicable regulatory capital requirement even after the payment of dividends.
Also, a foreign bank operating in India in a branch mode should have a positive PAT for the period for which the profits are to be remitted to the Head Office.
"A bank may declare and pay dividends 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 Financial Year (FY) 2026-27.
The RBI has also issued prudential norms on the declaration of dividends for small finance banks, local area banks, payment banks, and regional rural banks.