MUMBAI: The RBI has proposed to limit dividend payout by lenders with non-performing property beneath 6%. In a bid to overtake practically two-decade outdated norms, the regulator has additionally proposed ceilings on dividend payout ratios, which vary from 50% for zero web NPA ratio to fifteen% for a web NPA ratio above 4% however lower than 6%.
RBI on Tuesday launched a draft round on ‘declaration of dividend by banks and remittance of earnings to go workplace by international financial institution branches in India’.The prevailing pointers on dividend distribution got here into power in Could 2005.
The transfer, geared toward defending financial institution financials, is seen as a counter-cyclical prudential guideline as most banks have NPAs beneath this threshold. If banks with excessive NPAs are pressured to plough again earnings, they are going to be in a greater place to make provisions for the dangerous loans. When deciding on dividends or revenue remittance, the board or financial institution administration ought to think about NPAs, audit report {qualifications}, present/potential capital positions, and the financial institution’s long-term progress plans, RBI stated.
RBI on Tuesday launched a draft round on ‘declaration of dividend by banks and remittance of earnings to go workplace by international financial institution branches in India’.The prevailing pointers on dividend distribution got here into power in Could 2005.
The transfer, geared toward defending financial institution financials, is seen as a counter-cyclical prudential guideline as most banks have NPAs beneath this threshold. If banks with excessive NPAs are pressured to plough again earnings, they are going to be in a greater place to make provisions for the dangerous loans. When deciding on dividends or revenue remittance, the board or financial institution administration ought to think about NPAs, audit report {qualifications}, present/potential capital positions, and the financial institution’s long-term progress plans, RBI stated.
