- Dividend Limit: Banks may now distribute only up to 75% of their PAT (Profit After Tax) as dividends.
- Definition:
- ‘Dividend’ includes interim and final payouts on equity shares.
- Excludes dividends on Perpetual Non-Cumulative Preference Shares (PNCPS).
- Rationale:
- To strengthen banks’ capital base and ensure adequate retention for lending and risk coverage.
- Aligns with prudent regulatory practices, balancing shareholder returns with financial stability.
This means banks will retain at least 25% of profits, even in profitable years, to support growth and absorb potential shocks.
If you want, I can also list major banks likely affected and what this may mean for investors’ dividend income. Do you want me to do that?
