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Dividend Payout Ratio For Healthy Banks : RBI

Dividend Payout Ratio For Healthy Banks : RBI

The Reserve Bank of India has released draft norms allowing banks with strong financial metrics to increase dividend payouts to shareholders up to 50% of profits, from the earlier 40% ceiling.

  • The RBI emphasized it won’t entertain discretionary dispensations for dividends, mandating strict eligibility compliance.
  • This ensures only fundamentally strong banks pay higher returns based on real performance.

Key Highlights:

  • Banks must have net non-performing asset ratio below 6% for past 3 years
  • Minimum required capital adequacy levels should also be met
  • 50% payout ratio applicable for zero net NPA banks
  • Ceiling reduces on higher bad loans – just 15% if over 4% NPA
  • One-time gain items excluded from dividend calculations
  • Eased repatriation for foreign bank branches meeting criteria