Analysis of RBI Proposed Rules on NBFC Dividend Payout

Dear NBFCs either be a Bank or ready for regulations like a Bank.

This is the fundamental stance RBI has now for NBFCs. Loudly announcing the stance RBI Director says NBFC should convert  into banks. Soon after that RBI released proposed rules for conversion of NBFC into Bank. North Block now could not afford any other financial fiasco after ILFS, Yes Bank , DHFL, LVB , PMC Bank.

So now RBI Released Proposed Dividend Payout Rules for NBFC.

In this analysis we will explain these rules . 

Criteria : Capital Adequacy and Leverage Ratio


*If A,B,C criteria are not met, NBFC still eligible to pay dividend if Net NPA ratio is less than 4% and otherwise comply with general prudential norms.

Dividend Payout Ratio

A. For CICs




B. For NBFC-ND-SI & NBFC-D



Other Criteria

NBFCs should comply with the provisions of Section 45 IC of the RBI Act, 1934.

NBFCs should comply with the prevailing regulations/ guideline issued by RBI.

The proposed dividend should be payable only out of the current year's profit.

 

Reporting of Dividend to RBI


Proposed rules will be applicable from FY 20-21 (1-4-20)
Source : RBI
Blog by Sudarshan Bhandari
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Note : No content of this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is for educational and informational use only. The Author accepts no liability for any interpretation of article or comments on this blog being used for actual investment. This is purely an information services, and any trading done on the basis of this information is at your own, sole risk.


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