Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Declaration of Dividends) Directions, 2025
UR
- Applies toRural co-operative banks
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length33 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- 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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What it says
Opening paragraphs
1. Where the power comes from
RBI issues these rules under the Banking Regulation Act.
2. Why RBI issued them
RBI states it is satisfied these rules are needed in the public interest.
BankPulse example. RBI does not have to explain each rule one by one. It states that it is satisfied the rules are necessary and expedient in the public interest. That statement is the legal footing for everything that follows.
Chapter I. Preliminary
Background
1. The name of these rules
The rules are called the Prudential Norms on Declaration of Dividends Directions, 2025.
2. When they start
The rules take effect the moment RBI issues them.
3. Who is covered
These rules bind rural co-operative banks.
4. How the word is used
The rules speak of the banks together and of one bank singly.
5. Which banks those are
That means state co-operative banks and central co-operative banks.
6. Where the meaning comes from
Those two are defined in the National Bank for Agriculture and Rural Development Act.
7. What the capital ratio means
The capital ratio is worked out under RBI's own capital adequacy rules for these banks.
8. An interim payment counts
A dividend includes any interim dividend.
9. The bad loan ratio
The net non-performing asset ratio is net bad loans against net advances.
10. Words not defined here
Any word these rules do not define takes its meaning from the law or from ordinary trade use.
Chapter II. Declaration of dividends by an RCB
Must know
1. Five per cent or below
Net bad loans must be at or below five per cent for the year the dividend is proposed for.
Do it
2. What this book does
This book sets the tests a rural co-operative bank must pass before it pays a dividend.
3. Capital must be met
The bank must meet the capital it is required to hold.
4. Reserves must have been kept
The bank must have met its cash reserve and liquidity requirements during that year.
5. Provisions for impaired assets
Provisions must be made for impaired assets, income tax and employee benefits.
6. Losses cleared first
Accumulated losses must be adjusted in full before anything is paid.
7. What the board weighs
The board must weigh the bank's capital now and as projected against what it must hold.
BankPulse example. Before a dividend is declared the board looks at capital twice over. It weighs the capital position now, and the position projected forward, against what the bank must hold. It also asks whether provisions are enough.
8. Provisions and the outlook
It must also weigh whether provisions are enough, the economy and the outlook for profit.
BankPulse example. Two banks hold the same capital. One faces a weak economy and a poor outlook for profitability; the other does not. The board weighs the economic environment and that outlook, not the capital alone.
Background
9. Paid only from profit
A dividend may be paid only out of that year's net profit.
10. Where reversals are dealt with
Reversed provisions and unrealised profit on transferred loans follow a separate RBI rulebook.
11. The board decides on equity
The board takes this decision when declaring a dividend on equity shares.
Chapter III. Repeal and other provisions
Background
1. The old rules go
Every earlier instruction on declaring dividends for these banks is repealed.
2. What was already gone
Anything repealed before these rules came stays repealed.
3. Old actions stand
Action already taken under the old instructions is still judged by those instructions.
4. Old approvals carry over
Approvals given under the repealed instructions are treated as given under these rules.
5. Rights are not lost
The repeal does not take away any right, obligation or liability already created.
BankPulse example. A guarantee given under the old rules is still owed. The repeal does not take away any right, obligation or liability already acquired or incurred. What was owed before is still owed.
6. Penalties are not lost
A penalty or forfeiture already incurred survives the repeal.
7. Cases may still run
An investigation or a case may still be started or carried on as though nothing was repealed.
8. Other law still applies
These rules add to other laws and take nothing away from them.
9. RBI may clarify
RBI may issue clarifications to remove any difficulty in applying these rules.
10. RBI has the last word
RBI's reading of any provision here is final and binding.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for rural co-operative banks
RBI Kisan Credit Card rules for rural co-operative banks 2026
RBI capital adequacy rules for rural co-operative banks 2025
RBI credit bureau reporting rules for rural co-operative banks 2025
RBI customer service and fair conduct rules for rural co-operative banks 2025
RBI deposit interest rate rules for rural co-operative banks 2025
RBI digital banking channel rules for rural co-operative banks 2025
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