The Reserve Bank of India (RBI) on March 10, 2026, issued the Reserve Bank of India (Regional Rural Banks – Prudential Norms on Declaration of Dividend) Directions, 2026 under the powers conferred by Section 35A of the Banking Regulation Act, 1949.
The Directions, effective from Financial Year 2026–27, prescribe prudential norms governing the declaration of dividends by Regional Rural Banks (RRBs). The framework sets out eligibility conditions including compliance with regulatory capital requirements, positive adjusted Profit After Tax (PAT), and absence of regulatory restrictions. It also places responsibility on the Board of Directors to assess supervisory findings, audit observations, capital position, and long-term growth plans before approving dividend payouts.
The Directions further prescribe limits on the quantum of dividend based on Tier 1 capital ratio, with a maximum payout capped at 80% of PAT. Certain profits such as extraordinary income or overstated PAT identified in audit reports are excluded from dividend computation. Banks must report dividend declarations to the Department of Supervision of National Bank for Agriculture and Rural Development (NABARD), and non-compliance with the provisions may attract supervisory or enforcement action by the RBI.
[Notification No. DOR.ACC.REC.No.431/21.02.067/2025-26]
