The Reserve Bank of India (RBI) has introduced draft guidelines to tighten conditions for banks declaring dividends. The proposal suggests that banks should maintain net non-performing assets (NPAs) below 6% in the fiscal year for dividend distribution, compared to the earlier threshold of 7%. Additionally, the capital adequacy requirement for small finance banks and payment banks has been raised to 15%. The maximum dividend payout ratio may increase to 50% from 40%, varying based on a bank’s net NPA levels. These guidelines, aligned with Basel III standards, aim to enhance financial stability and align with current banking frameworks.
RBI Proposes Stricter Guidelines for Bank Dividends Amid Capital Adequacy Focus
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