{"id":357842,"date":"2026-03-11T14:25:26","date_gmt":"2026-03-11T08:55:26","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=357842"},"modified":"2026-03-11T14:25:26","modified_gmt":"2026-03-11T08:55:26","slug":"commercial-banks-prudential-norms-on-declaration-of-dividend-and-remittance-of-profit-directions-2026","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/commercial-banks-prudential-norms-on-declaration-of-dividend-and-remittance-of-profit-directions-2026\/","title":{"rendered":"Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions, 2026"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>News: <\/strong>Reserve Bank of India (RBI) has issued Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions 2026 to revise prudential norms for dividend declaration by commercial banks.<\/p>\n<h2 style=\"text-align: justify;\">About Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions 2026<\/h2>\n<figure id=\"attachment_357858\" aria-describedby=\"caption-attachment-357858\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-357858\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?resize=300%2C164&#038;ssl=1\" alt=\"Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions, 2026\" width=\"300\" height=\"164\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?resize=300%2C164&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?resize=1024%2C561&amp;ssl=1 1024w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?resize=768%2C420&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?resize=1536%2C841&amp;ssl=1 1536w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/03\/Source-DD-News-1.jpg?w=1569&amp;ssl=1 1569w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-357858\" class=\"wp-caption-text\">Source &#8211; DD News<\/figcaption><\/figure>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\"><strong>Come into effect:<\/strong> The new directions will<strong> come into effect from FY 2026\u201327 (FY27).<\/strong><\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>CET1-linked dividend framework: As per new direction, <\/b>d<span style=\"font-weight: 400;\">ividend payouts are linked to <\/span><b>Common Equity Tier-1 (CET1) capital ratios<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The framework introduces <\/span><b>10 capital-ratio buckets<\/b><span style=\"font-weight: 400;\"> to determine the maximum permissible dividend payout.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Note: <\/b><span style=\"font-weight: 400;\">CET1 ratio <strong>compares a bank\u2019s capital against its risk-weighted assets<\/strong> to determine its ability to withstand financial distress.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Dividend limits: As per the new direction:<\/b>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Banks with <\/span><b>CET1 ratio of 8% or below cannot declare dividends<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Banks with <\/span><b>CET1 above 20% may distribute up to 100% of adjusted Profit After Tax (PAT)<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">However, <\/span><b>total dividend payout cannot exceed 75% of PAT<\/b><span style=\"font-weight: 400;\"> regardless of the CET1 bucket.<\/span><\/li>\n<li><strong>Local Area Banks and Regional Rural Banks (RRBs) will be allowed to declare dividends up to 80 per cent<\/strong> of the PAT, subject to compliance with prudential conditions laid down by the RBI.<\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\"><strong>Adjusted Profit After Tax (PAT):<\/strong><span style=\"font-weight: 400;\"> It introduces <\/span><b style=\"font-weight: 400;\">Adjusted PAT to<\/b><span style=\"font-weight: 400;\"> reduce dividend eligibility for banks with <\/span><b>higher levels of bad loans<\/b><span style=\"font-weight: 400;\">.<\/span>\n<ul style=\"font-weight: 400;\">\n<li><strong>Note:<\/strong> <b style=\"font-weight: 400;\">Adjusted PAT <\/b>is <span style=\"font-weight: 400;\">calculated as <\/span><b>net profit minus 50% of net Non-Performing Assets (NPAs) <\/b><b style=\"font-weight: 400;\">as on March 31<\/b><span style=\"font-weight: 400;\"> of the relevant financial year.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Rules for systemically important banks:<\/b><span style=\"font-weight: 400;\"> For <\/span><b>Domestic Systemically Important Banks (D-SIBs)<\/b><span style=\"font-weight: 400;\">, the <\/span><b>D-SIB capital buffer<\/b><span style=\"font-weight: 400;\"> is <strong>added to each bucket thresholds.<\/strong>\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Eligibility conditions for dividend declaration:<\/b>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Banks must meet <\/span><b>regulatory capital requirements before and after dividend payment<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">They must have a <\/span><b>positive adjusted PAT<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">They should not face any existing <\/span><b>restrictions from RBI on distribution<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Board oversight:<\/b><span style=\"font-weight: 400;\"> The board of directors must consider <\/span><b>divergence in asset classification and NPA provisioning, <\/b><span style=\"font-weight: 400;\">review the <\/span><b>auditors\u2019 report<\/b><span style=\"font-weight: 400;\">, and assess the <\/span><b>current and projected capital position and long-term growth plans<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Rules for foreign banks:<\/b><span style=\"font-weight: 400;\"> Foreign banks operating in India through branches may <\/span><b>remit net profits to their head offices without prior RBI approval<\/b><span style=\"font-weight: 400;\"> if accounts are audited.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">However, <\/span><b>exceptional income, overstated profits identified by auditors, and unrealised gains on level-3 financial instruments are excluded<\/b><span style=\"font-weight: 400;\"> from remittable profits.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\"><b>Reporting and compliance:<\/b><span style=\"font-weight: 400;\"> Banks <\/span><b>must report dividend payments or profit remittances to RBI\u2019s Department of Supervision within a fortnight of the declaration.<\/b><span style=\"font-weight: 400;\"> Non-compliance may attract supervisory or enforcement action.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: Reserve Bank of India (RBI) has issued Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions 2026 to revise prudential norms for dividend declaration by commercial banks. About Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions 2026 Come into effect: The new directions&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/commercial-banks-prudential-norms-on-declaration-of-dividend-and-remittance-of-profit-directions-2026\/\">Continue reading <span class=\"screen-reader-text\">Commercial Banks \u2013 Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions, 2026<\/span><\/a><\/p>\n","protected":false},"author":10366,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872,11853],"class_list":["post-357842","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","tag-dd-news","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/357842","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10366"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=357842"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/357842\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=357842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=357842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=357842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}