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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Non-Banking Financial Companies - Prudential Norms on Declaration of Dividends) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/360 DOR.ACC.REC.279/21.02.067/2025-26

RBI has issued Reserve Bank of India (Non-Banking Financial Companies - Prudential Norms on Declaration of Dividends) Directions, 2025, effective from 28th Nov 2025. Applicability: These directions apply to all NBFC categories, including NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC, HFCs, Mortgage Guarantee Companies (MGCs), Core Investment Companies (CICs), SPDs, and NBFC-P2P and NBFC-AA. Key Highlights: - Stricter Eligibility Requirements: NBFCs must meet capital adequacy norms and maintain NNPA below 6% for the last three years to become eligible to declare dividends. SPDs have additional CRAR-specific requirements. - Dividend payout ratios are now capped at 50% for most NBFCs, 60% for CICs and SPDs, No cap for NBFCs with no public funds and no customer interface, and Exceptional items and auditor qualifications must be excluded while computing payout ratios. - NBFCs that do not meet the three-year capital/NPA test may still declare dividend up to 10%, subject to meeting current-year capital adequacy and NNPA 4% or less. - SPDs failing to maintain CRAR of 15% in any quarter are barred from declaring dividends. - NBFCs and HFCs must report dividend declarations to RBI/NHB within 15 days, using prescribed formats. SPDs must also attach the Board resolution recommending the dividend. For more information, kindly refer to the attached document.

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