RBI Proposes 75% Cap on Banks Dividend Payouts:
India’s banking regulator has proposed a key reform to ensure long term financial stability of banks. As banks report stronger profits and improved asset quality, the focus has now shifted to prudent capital management. The proposed move seeks to balance rewarding shareholders while ensuring banks retain sufficient earnings to absorb future risks.The Reserve Bank of India has proposed to cap banks’ dividend payout at 75% of their Profit After Tax (PAT). The proposal is part of RBI’s draft guidelines aimed at strengthening banks capital position.Under the proposed norms, banks will not be allowed to distribute dividends exceeding 75% of their annual profits.This applies to scheduled commercial banks and is intended to ensure that a portion of profits is retained to support future growth and risk management.The RBI has invited feedback from stakeholders before finalising the guidelines.
