Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Declaration of Dividends) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toFinance companies
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length28 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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26 of the 28 points name no product and bind every product. All products.
Numbers to remember
| 20 per cent | A standalone primary dealer needs 20 per cent CRAR in each quarter of the year. RBI Para 8(1) |
| six per cent | Net bad loans must stay under six per cent in each of the last three years. RBI Para 8(2) |
| ten per cent | A company failing the three-year tests may still pay, capped at ten per cent. RBI Para 11(2) |
| four per cent | That door needs current capital compliance and net bad loans under four per cent. RBI Para 11(2) |
| 15 per cent | A dealer below 15 per cent CRAR in any quarter may pay nothing. RBI Para 12 |
| 33.3 per cent | With every quarter at or above the minimum but below 20 per cent, payout cannot exceed 33.3 per cent. RBI Para 12 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Chapter I. Preliminary
1. Start date
These Directions took effect immediately upon issuance.
BankPulse example. There is no gap here between issue and effect. The Directions come into effect immediately upon issuance. A bank cannot wait for a separate start date, because there is none.
2. Who is covered
These rules bind registered non-banking financial companies across all layers.
3. Holding companies excluded
A non-operative financial holding company is outside these rules.
4. Interim counts too
Dividend here includes any interim dividend.
5. Payout ratio defined
The payout ratio compares the year's dividend, interim included, with audited net profit.
Chapter II. Declaration of dividend
Must know
1. Dealers need twenty
A standalone primary dealer needs 20 per cent CRAR in each quarter of the year.
BankPulse example. A dealer reports 22, 21, 20 and 19 per cent across the four quarters. The last quarter is below 20 per cent, so the test is not met. The minimum of 20 per cent has to hold in every one of the four quarters.
2. Bad loans under six
Net bad loans must stay under six per cent in each of the last three years.
3. The payout ceilings
The payout may not cross 60 for core investment companies and dealers, and 50 for others.
4. The ten per cent door
A company failing the three-year tests may still pay, capped at ten per cent.
5. Four per cent to enter
That door needs current capital compliance and net bad loans under four per cent.
6. Fifteen stops a dealer
A dealer below 15 per cent CRAR in any quarter may pay nothing.
BankPulse example. A dealer falls to 14 per cent in one quarter. It may declare no dividend at all that year. The regulatory minimum is 15 per cent, and one quarter below it is enough.
7. A third at most
With every quarter at or above the minimum but below 20 per cent, payout cannot exceed 33.3 per cent.
BankPulse example. A dealer holds 17 per cent in one quarter and above 15 per cent in the rest. It stays above the minimum but under 20 per cent. So the payout may not exceed 33.3 per cent of profit.
8. A fortnight to report
Dividend details go to RBI's regional supervision office within a fortnight of declaration.
Do it
9. What the Board weighs
The Board must weigh divergence findings, auditor qualifications and long term growth plans.
10. Board owns the total
The Board must ensure the year's total dividend stays inside these ceilings.
11. Three clean years
Capital requirements must have been met in each of the last three financial years.
12. Young firms since birth
A younger company must have complied since its registration.
13. The reserve fund first
The statutory reserve fund requirement of the RBI Act must be met.
Background
14. Housing firms, housing law
A housing finance company meets the reserve requirement of the housing bank law instead.
15. Preference shares counted
Proposed dividend counts equity and the convertible preference shares sitting in core capital.
16. Windfalls come out
Exceptional income and any overstated profit are removed before the payout ratio is worked out.
17. Type I uncapped
A Type I company faces no specified payout ceiling.
18. Base layer freed
A base layer company with customer interface and no public funds faces no ceiling.
19. No ad-hoc mercy
RBI and NHB will not entertain requests for ad-hoc dividend dispensation.
20. Provision reversals guided
Payouts from reversed provisions follow the credit risk transfer Directions.
21. Housing firms report NHB
A housing finance company reports its dividend to the National Housing Bank within a fortnight.
22. Dealers report differently
A dealer reports in its own format with the Board resolution, to the debt management department.
Chapter III. Repeal provisions
1. Old actions stay valid
Action taken under the repealed rules is still governed by those rules.
What RBI has fined people for under this rulebook
RBI has imposed 1 monetary penalty on this kind of lender. In each one its own stated reason names the subject of this rulebook. Each one links to the press release it was read from.
This tells you the rulebook RBI named. It does not tell you which of the points on this page was broken, because RBI does not say. Read the order itself before drawing any conclusion about your own bank.
These come from RBI press releases. The penalty tracker holds them all. It also lists the penalties we could not place on any rulebook, and the reason for each one.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for NBFCs
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