Press Release no. 2025-2026/2242; Dated: 10.03.2026
The Reserve Bank of India (RBI) has issued revised prudential norms governing the declaration of dividends and remittance of profits by regulated entities (REs). The revised framework aims to ensure that profit distribution by banks remains aligned with their financial strength and capital adequacy.
1. Dividend Declaration by Banks Incorporated in India
Under the revised norms, banks incorporated in India that satisfy the prescribed eligibility criteria may declare dividends, subject to regulatory limits.
The total dividend declared by such banks must not exceed 75% of the Profit After Tax (PAT) for the relevant financial period. This cap applies to the aggregate dividend payout, ensuring that banks retain sufficient earnings to maintain capital buffers and financial stability.
2. Profit Remittance by Foreign Banks
For foreign banks operating in India, the revised norms prescribe that profits may be remitted to the Head Office only if the bank has recorded a positive Profit After Tax (PAT) for the relevant period.
This requirement ensures that profit remittances are made only when the branch operations in India generate actual profits.
3. Objective of the Revised Norms
The revised prudential framework seeks to:
- Ensure financial stability and adequate capital retention within regulated entities
- Maintain prudential discipline in profit distribution
- Align dividend and profit remittance practices with sound risk management principles
- Strengthen regulatory oversight over capital management by banks.
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