Focus on provisions, capital in draft bank dividend norms

The Reserve Bank of India (RBI) on Tuesday issued draft norms on declaring bank dividends, laying down eligibility criteria and guidelines on board oversight.

- Gopika Gopakumar

The bank's board or management should consider whether there is any divergence in classification and provisioning for non-performing assets (NPAs), current capital position and long-term growth plans, before considering the proposal for declaration of dividend or remittance of profits.

RBI said banks need to meet the applicable regulatory capital requirement for each of the last three financial years, including the financial year for which the dividend is proposed.

The net NPA ratio for the financial year for which the dividend is proposed should be less than 6%, it said.