The Reserve Bank of India issued the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Amendment Guidelines, 2026 on March 10, 2026. These amendments follow the introduction of the Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit Directions, 2026. The revised guidelines modify Paragraph 13 relating to declaration of dividends by wholly owned subsidiaries (WOS) of foreign banks operating in India. Under the amendment, a WOS incorporated in India may declare dividends in the same manner as domestic banks, subject to the prudential conditions specified in the RBI’s dividend and profit remittance directions. The declared dividends may be repatriated in accordance with the provisions of Foreign Exchange Management Act, 1999. These changes aim to align dividend distribution rules for foreign bank subsidiaries with those applicable to domestic banks while ensuring regulatory oversight. The amended guidelines will come into force from Financial Year 2026–27.
RESERVE BANK OF INDIA
RBI/DOR/2025-26/233
DOR.ACC.REC.No.432/21.02.067/2025-26 | Dated: March 10, 2026
Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Amendment Guidelines, 2026
Please refer to the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025 (hereinafter referred to as ‘the Guidelines’).
2. On a review, consequent to the issuance of the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. The Amendment Guidelines modify paragraph 13 titled ‘Declaration of Dividends’ as under:
13. The WOS of a foreign bank, being a company incorporated in India, may declare dividend like domestic banks subject to criteria laid down in Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026 Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026, which may be repatriated as per the provisions of FEMA 1999.
4. The above amendments shall come into effect from Financial Year (FY) 2026-27.
(Sunil T S Nair)
Chief General Manager
