Mumbai, March 10 -- The Reserve Bank of India (RBI) has softened its proposed dividend payout framework for banks after industry feedback, easing some accounting restrictions while retaining the broader structure that links payouts to core capital strength.

The most significant modification is about how bad loans are treated while calculating profits available for dividend distribution. In the draft proposal issued on 6 January, banks were required to deduct 100% of their net non-performing assets (NPAs) from profit to arrive at adjusted profit after tax.

Following feedback from stakeholders that this assumption was too conservative, the RBI has revised the rule. Under the final framework released on Tuesday, banks will now deduct 50% o...