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RBI bans dividend payments on FY20 profits

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2020-21/75 · issued 04 Dec 2020 · ~1 min read
Quick answerRBI has directed all commercial and cooperative banks not to pay any dividend on equity shares from FY20 profits, citing COVID-19 stress and the need to conserve capital for supporting the economy and absorbing losses.

What changed

RBI issued a circular on December 4, 2020, prohibiting banks from declaring dividends on equity shares from profits for the financial year ended March 31, 2020. This extends an earlier April 2020 directive that had already restricted dividend payouts.

What it means for you

Banks must retain all FY20 profits to strengthen balance sheets amid pandemic uncertainty. This bolsters capital buffers for lending to the real economy and absorbing potential credit losses. Shareholders will not receive dividends for that period, impacting investor returns.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All commercial banks (public and private sector), All cooperative banks (urban and rural), Bank shareholders and investors, Bank boards and management teams

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this ban apply to dividends from profits of later financial years?

No, the circular specifically restricts dividends only from profits pertaining to the financial year ended March 31, 2020. Future dividends will be governed by subsequent RBI instructions.

Are preference share dividends also banned under this circular?

The circular explicitly mentions 'dividend payment on equity shares'. It does not address preference shares, but banks should consult RBI guidelines for any related restrictions.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #333: DOR.BP.BC.No.29/21.02.067/2020-21 — "Declaration of Dividends by Banks" dated December 4, 2020”
📜 Read the original circular — full text as issued by RBI
RBI/2020-21/75 DOR.BP.BC.No.29/21.02.067/2020-21 December 4, 2020 All Commercial Banks and All Cooperative Banks, Madam / Dear Sir, Declaration of dividends by banks Please refer to our circular DOR.BP.BC.No.64/21.02.067/2019-20 dated April 17, 2020 , on the captioned subject. 2. In view of the ongoing stress and heightened uncertainty on account of COVID-19, it is imperative that banks continue to conserve capital to support the economy and absorb losses. In order to further strengthen the banks’ balance sheets, while at the same time support lending to the real economy, it has been decided that banks shall not make any dividend payment on equity shares from the profits pertaining to the financial year ended March 31, 2020. Yours faithfully, (Usha Janakiraman) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/75 · issued 04 Dec 2020. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12003&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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