These stringent rules have completely changed the equation for dividend distribution. Earlier, dividends were announced merely by looking at the net profit.Now, the RBI has tightened the previous criteria for dividend distribution, as if installing five safety doors (Five Conditions) to safeguard the bank’s treasury. Unless a bank clears all five of these tests, members will no longer receive the benefit of dividends.
If there is a sweetest word in the cooperative sector, it is ‘Dividend’! In the economics of a cooperative institution, ‘Dividend’ has always been a topic of discussion and excitement. This share from the institution’s profits represents a return on the members’ ownership of their investment. However, now the Reserve Bank of India (RBI) has tightened its regulatory grip even more on this dividend celebration of cooperative banks (both urban and state or district cooperatives). On 28th November 2025, the RBI issued ‘Prudential Norms on Declaration of Dividends’ for both Urban Cooperative Banks (UCBs) and State/District Cooperative Banks (RCBs), sending a clear message to banks: “Profits do not automatically mean dividends. Let go of this old misconception. Only if your institution maintains ‘financial discipline’ can the dividend celebration take place!”....(To continue, open the magazine)