NON-BANKING FINANCIAL COMPANIES (NBFCs)

June 27, 2021

The Reserve Bank of India (RBI) on Thursday issued guidelines on the distribution of dividend by non-banking financial companies (NBFCs) to infuse greater transparency and uniformity in the practice.

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The guidelines will be effective for the declaration of dividend from the profits of the financial year ending March 31, 2022, and onwards.
NPA ratio should be less than 6% for dividend declaration
The guidelines will be applicable to NFBCs regulated by RBI. As per the prescribed minimum prudential requirements for declaration of dividend, the net NPA ratio of the concerned NBFC should be less than 6 per cent in each of the last three years, including the end of the financial year for which the dividend is proposed to be declared.
Also, NBFCs should meet the applicable regulatory capital requirement for each of the last three financial years, including the financial year for which the dividend is proposed. The guidelines prescribe a ceiling on the dividend payout ratio for NBFCs.

Source : All India Radio