New Delhi, March 11 -- The Reserve Bank of India (RBI) has introduced a new set of prudential norms for banks that cap dividend payouts at a maximum of 75 per cent of Profit After Tax (PAT) for most banks, linking profit distribution more closely with capital strength, profitability and regulatory compliance.

The central bank issued the Reserve Bank of India (Commercial Banks - Prudential Norms on Declaration of Dividend and Remittance of Profit) Directions, 2026 on March 10. These norms will come into effect from Financial Year (FY) 2026-27 and will replace the earlier directions issued on November 28, 2025.

Under the new framework, banks incorporated in India that meet the eligibility criteria will be allowed to declare dividends up t...