RBI sets limits for banks' dividends

The Reserve Bank of India (RBI) said today that banks wanting to pay dividends should have a minimum capital to risk adjusted ratio (CRAR) of 9% for preceding two completed years and the accounting year for which it proposes to declare dividend, and Net NPAs less than 7%.

A notification said banks meeting these limits can pay dividends of up to 40% of net profit.

"In case any bank does not meet the above CRAR norms, but is having a CRAR of at least 9 % for the accounting year for which it proposes to declare dividend, it would be eligible to declare dividend provided its Net NPA ratio is less than 5%," the notification added.