India Proposes Tighter Rules for Dividend Payouts by Lenders
- Banks have to meet capital requirements before paying dividend
- Rules will be effective financial year starting April, 2024
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India proposed a set of conditions that local lenders and overseas banks operating in the country must meet before paying shareholders dividends, to overhaul two-decade old regulations.
Lenders have to meet specific capital requirements for three financial years before giving out dividends, according to a statement on the proposed rules from the Reserve Bank of India on Tuesday. The banks will also have to meet other conditions, including keeping net bad loans at less than 6% of the total for the year and creating adequate provisions for impaired assets before a dividend payout, according to the RBI.