New Delhi, Jan. 7 -- The Reserve Bank of India (RBI) proposes to raise the dividend payout cap for banks to 75 per cent of net profit from the earlier limit of 40 per cent.

The central bank also proposed that bank boards should comprehensively assess asset quality trends, provisioning gaps, capital adequacy and long-term growth plans before approving any dividend payout.

In a draft set of prudential norms on declaration of dividends and remittance of profits, the central bank has laid down a graded structure for dividend payments based on banks' common equity tier-1 (CET1) capital levels and invited comments from stakeholders by February 5.

The draft directions, which will come into effect from the financial year 2026-27, will apply to...