InvestorQ : What are the conditions that RBI has imposed on the NBFC dividend payments?
Rashi Mehra made post

What are the conditions that RBI has imposed on the NBFC dividend payments?

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Archita Jajjoo answered.
6 months ago
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RBI has imposed restrictions on systemically important NBFCs paying dividend to shareholders from FY22. For the NBFCs to be eligible to pay dividends, they must meet minimum capital adequacy ratios and have a net NPA ratio of less than 6%. Also, the RBI has clarified that any regulatory findings on divergence in classification and provisioning, as well as any auditor qualifications will be deemed as negative points.

Under the new rules, the systemically important NBFCs that do not accept public deposits or public funds can pay up to 60% of their net income as dividends i.e. the dividend pay-out ratio. The other NBFCs would only be allowed to pay 50% of the net income i.e. its dividend pay-out ratio cannot exceed 50%. These rules will be applicable effective from FY22.

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