RBI's New Dividend Norms for Rural Co-operative Banks

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 263 kb ) Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Declaration of Dividends) Directions, 2025 RBI/DOR/2025-26/315 DOR.ACC.REC.234/21-02-067/2025-26 November 28, 2025 Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Declaration of Dividends) Directions, 2025 Table of Contents Chapter I - Preliminary A. Short title and commencement B. Applicability C. Definitions Chapter II - Declaration of dividends by an RCB Chapter III - Repeal and other provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations In exercise of the powers conferred by section 35A read with section 56 of the Banking Regulation Act (BR Act), 1949 and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified. Chapter I - Preliminary A. Short title and commencement 1. These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Declaration of Dividends) Directions, 2025. 2. These Directions shall come into effect immediately upon issuance. B. Applicability 3. These Directions shall be applicable to Rural Co-operative Banks (hereinafter collectively referred to as 'RCBs' and individually as a 'RCB'). In this context, rural co-operative banks shall mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981. C. Definitions 4. In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below. (i) ‘CRAR’ means Capital to Risk Weighted Assets Ratio calculated in terms of Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025 . (ii) ‘Dividends’ includes any interim dividend (iii) ‘Net Non-Performing Asset (NNPA) ratio’ means ratio of NNPA to net advances. 5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the applicable Acts, rules / regulations made thereunder, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be. Chapter II - Declaration of dividends by an RCB 6. An RCB may declare dividends provided it fulfils the following conditions: (i) It shall comply with applicable regulatory capital requirement; (ii) NNPA ratio shall be equal to or below five per cent for the financial year for which dividend is proposed; (iii) The bank has complied with Cash Reserve Ratio (CRR) / Statutory Liquidity Ratio (SLR) requirements during the financial year for which dividend is proposed; (iv) All necessary provisions for impaired assets and also for payment of income tax, provision for employee benefits, etc., have been made; and (v) Dividend shall be paid out of net profit, of the financial year for which dividend is being paid, after making all statutory provisions and adjustment of accumulated losses, if any, in full. 7. The prudential treatment of reversal of excess provision, dividend payment by a bank on reversal of such provisions and unrealized profits arising on account of transfer of loans and Security Receipts guaranteed by the Government of India shall be guided by the instructions contained in Reserve Bank of India (Rural Co-operative Banks – Transfer and Distribution of Credit Risk) Directions, 2025 . 8. While declaring dividend on equity shares, the Board of Directors of an RCB shall inter alia consider the current and projected capital position of the bank vis-à-vis the applicable capital requirements and the adequacy of provisions, taking into account the economic environment and the outlook for profitability. Chapter III - Repeal and other provisions A. Repeal and saving 9. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Prudential Norms on Declaration of Dividend as applicable to Rural Co-operative Banks stand repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025 . The Directions, instructions and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed. 10. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these Directions, instructions, or guidelines shall not in any way prejudicially affect: (i) any right, obligation or liability acquired, accrued, or incurred thereunder; (ii) any, penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder; (iii) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those Directions, instructions, or guidelines had not been repealed. B. Application of other laws not barred 11. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations or Directions, for the time being in force. C. Interpretations 12. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the Reserve Bank may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the Reserve Bank shall be final and binding. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DOR/2025-26/315 · issued 28 Nov 2025. The plain-English explanation above is BankPulse’s own independent summary.

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Topics: Co-operative Banks

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