New Delhi (25.06.2021): The Reserve Bank of India (RBI) has put in place some conditions for NBFCs to pay dividends to shareholders from the financial year ending March 31, 2022. The regulator said that conditions were specific to different categories of NBFCs, which would have to meet minimum capital adequacy ratios, net non-performing asset (NPA) ratios, and a few other criteria to be able to declare dividends. The RBI said a non-bank financier must report a net NPA ratio of less than 6 per cent in each of the last three years, including as at the close of the financial year for which dividend is proposed. The RBI said that board of directors while considering proposals for dividends will take into account supervisory findings of the regulator on divergence in classification and provisioning for bad loans. It should also look at qualifications in the auditors’ report to the financial statements and long-term growth plans of the NBFC. “The board shall ensure that the total dividend proposed for the financial year does not exceed the ceilings specified in these guidelines," the regulator said. The RBI also specified the dividend payout ratios for various categories of non-banks. This is the ratio between the amount of dividend payable in a year and the net profit according to the audited financial statements for the financial year.
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RBI puts conditions for NBFCs to pay dividend
By IndianMandarins - 2021-06-25 11:05:00
New Delhi (25.06.2021): The Reserve Bank of India (RBI) has put in place some conditions for NBFCs to pay dividends to shareholders from the financial year ending March 31, 2022. The regulator said that conditions were specific to different categories of NBFCs, which would have to meet minimum capital adequacy ratios, net non-performing asset (NPA) ratios, and a few other criteria to be able to declare dividends.
The RBI said a non-bank financier must report a net NPA ratio of less than 6 per cent in each of the last three years, including as at the close of the financial year for which dividend is proposed.
The RBI said that board of directors while considering proposals for dividends will take into account supervisory findings of the regulator on divergence in classification and provisioning for bad loans. It should also look at qualifications in the auditors’ report to the financial statements and long-term growth plans of the NBFC. “The board shall ensure that the total dividend proposed for the financial year does not exceed the ceilings specified in these guidelines," the regulator said.
The RBI also specified the dividend payout ratios for various categories of non-banks. This is the ratio between the amount of dividend payable in a year and the net profit according to the audited financial statements for the financial year.
