The Reserve Bank of India issued the Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Repeal Directions, 2026, repealing the earlier 2025 Directions with effect from FY 2026–27. The repeal replaces the previous regulatory framework governing dividend declaration by Local Area Banks with the newly issued 2026 Directions. RBI clarified that the repeal is made in the public interest and aims to transition dividend governance under an updated regulatory framework. Importantly, actions taken, approvals granted, or proceedings initiated under the repealed 2025 Directions will continue to remain valid and will be governed by the earlier provisions. The repeal does not affect any rights, liabilities, penalties, investigations, or legal proceedings arising under the earlier Directions. Such matters may continue to be pursued and enforced as if the earlier Directions had not been repealed. Thus, while the regulatory regime for dividend declaration by Local Area Banks shifts to the 2026 Directions, existing obligations and enforcement actions under the earlier framework remain legally protected.
Reserve Bank of India
RBI/DOR/2025-26/237
DOR.ACC.REC.No.426/21.02.067/2025-26 | Dated: March 10, 2026
Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Repeal Directions, 2026
The Reserve Bank of India being satisfied that it is necessary and expedient in the public interest to do so, hereby repeals the Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Directions, 2025 (DOR.ACC.REC.161/21-02-067/2025-26) issued on November 28, 2025, with effect from Financial Year (FY) 2026-27. The Directions shall be replaced with Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Directions, 2026 issued on March 10, 2026, with effect from FY 2026-27.
2. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed Directions shall be deemed as governed by these Directions. Further, the repeal of these Directions shall not in any way prejudicially affect:
(1) any right, obligation or liability acquired, accrued, or incurred thereunder;
(2) any, penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder; and
(3) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings, or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed.
(Sunil T S Nair)
Chief General Manager
