RBI tightens dividend payout norms for NBFCs, links them to bad debt

NBFCs can give dividend only if accounts are clean, NPAs not hidden, and are below 6 per cent for the last three years

The Reserve Bank of India (RBI) on Thursday tied down a non-banking financial company’s (NBFC’s) ability to pay dividends to certain factors, including how much bad debt it has in its books and whether it has declared it correctly.

The dividend ratio, which is the ratio between the amount of the dividend payable in a year and net profit, is now capped at 50 to 60 per cent, depending upon the nature of the business. Any extraordinary income in the year has to be excluded from profits to arrive at the dividend ratio, the RBI said.  

However, there will be