**Summary:**
This Reserve Bank of India (RBI) circular, reference number DOR.ACC.REC.721/02.067/2021-22 dated April 22, 2021, addresses the declaration of dividends by all commercial and cooperative banks.
In light of the continuing economic uncertainty due to the COVID-19 pandemic, the RBI has decided to review the dividend declaration norms for the financial year ending March 31, 2021, to ensure banks maintain resilience and conserve capital.
**Commercial Banks:**
The circular partially modifies instructions from circular DBOD.NO.BP.BC.88/21.02.067/2004-05 dated May 4, 2005, allowing commercial banks to pay dividends on equity shares from profits for the financial year ending March 31, 2021. However, the quantum of dividend shall not exceed fifty percent of the amount determined as per the dividend payout ratio prescribed in paragraph 4 of the May 4, 2005 circular. All other instructions in the May 4, 2005 circular remain unchanged.
**Cooperative Banks:**
Cooperative banks are permitted to pay dividends on equity shares from the profits of the financial year ending March 31, 2021, as per existing instructions.
**General Instructions:**
All banks must continue to meet applicable minimum regulatory capital requirements after dividend payment. The Board of Directors is responsible for considering the bank's current and projected capital position, applicable capital requirements, and the adequacy of provisions, taking into account the economic environment and outlook for profitability, before declaring dividends on equity shares.
For any queries, banks can contact the Department of Regulation, Central Office, Reserve Bank of India at cgmicdorrbi.org.in. The central office is located on the 12th & 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. Contact can be made via telephone at 022-2260 1000 or via fax at 022-2270 5691.
Usha Janakiraman, Chief General Manager, signed the circular.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the primary regulator for banks in India.
Commercial Banks: Banks operating for profit, regulated by the Reserve Bank of India.
Cooperative Banks: Banks organized under cooperative principles, also regulated by the Reserve Bank of India.
COVID 19: The coronavirus disease, a global pandemic that has impacted economic activity.
March 31, 2021: The end date of the financial year for which dividend declaration norms are being reviewed.
DBOD.NO.BP.BC.88 21.02.067200405 dated May 4, 2005: A circular issued by the Reserve Bank of India regarding dividend payments. Modified by this notification.
Usha Janakiraman: Chief General Manager at Reserve Bank of India, signatory of the notification.
Mumbai, Maharashtra: Location of the Central Office of the Reserve Bank of India, where the Department of Regulation is situated.
भारतीय �रज़व� ब�क
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2021-22/23
DOR.ACC.REC.7/21.02.067/2021-22 April 22, 2021
All Commercial Banks and Cooperative Banks,
Madam / Sir,
Declaration of dividends by banks
Please refer to our circular DOR.BP.BC.No.29/21.02.067/2020-21 dated December
4, 2020, and other associated circulars on the captioned subject.
2. In view of the continuing uncertainty caused by the ongoing second wave of COVID-
19 in the country, it is crucial that banks remain resilient and proactively raise and
conserve capital as a bulwark against unexpected losses. Therefore, while allowing
banks to pay dividend on equity shares, it has been decided to review the dividend
declaration norms for the year ended March 31, 2021 as below.
Commercial Banks
3. In partial modification of the instructions contained in circular DBOD.NO.BP.BC.88/
21.02.067/2004-05 dated May 4, 2005, banks may pay dividend on equity shares from
the profits for the financial year ended March 31, 2021, subject to the quantum of
dividend being not more than fifty percent of the amount determined as per the
dividend payout ratio prescribed in paragraph 4 of the said circular. Other instructions
in the circular dated May 4, 2005 shall remain unchanged.
Cooperative Banks
4. Cooperative banks shall be permitted to pay dividend on equity shares from the
profits of the financial year ended March 31, 2021 as per the extant instructions.
िविनयमनिवभागक��ीय कायार्लय व�और व� मंिजल क��ीयकायार्लय भवन शहीद भगत�संहमागर्फोटर्मबुं ई
दरू भाष फैक्स ईमेल cgmicdor@rbi.org.in
, , 12 13 , , , , -400001
_____________________________________________________________________________________________________________________________________D
epartment of Regulation, Central Office, :1 02t2h 2a-n2d2 1630th1 F0l0oo0r , Cen:t r0a2l 2O-f2fic2e7 0B5u6ild9in1g , -Sha:hid Bhagat Singh Marg, F ort, Mumbai- 400 001
Tel: 022- 2260 1000 Fax: 022-2270 5691 email: cgmicdor@rbi.org.in
�हंदीआसानहैइसका�योगबढ़ाइएGeneral
5. All banks shall continue to meet the applicable minimum regulatory capital
requirements after dividend payment. While declaring dividend on equity shares, it
shall be the responsibility of the Board of Directors to 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.
Yours faithfully,
-sd-
(Usha Janakiraman)
Chief General Manager
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