The Reserve Bank of India announced that the Supervisory Data Quality Index (sDQI) score for scheduled commercial banks has shown improvement in the September 2025 quarter. The index, which measures the quality of supervisory data submissions, recorded a score of 90.7 compared to 89.9 in the April-June period.

Understanding the Supervisory Data Quality Index

The RBI created the sDQI to provide a comprehensive assessment of data quality across four key parameters: accuracy, timeliness, completeness, and consistency in the submission of supervisory returns. The index serves as an objective tool to evaluate banks' adherence to the principles outlined in the RBI's Master Direction on Filing of Supervisory Returns 2024.

Performance Metrics and Scoring Framework

The September 2025 quarter showed notable improvement in banking sector compliance, with no entity scoring below the 80-point threshold. The RBI has established a clear scoring framework to categorize performance levels:

The improvement to 90.7 places the banking sector firmly in the "good" category, reflecting enhanced data management practices across institutions.

Scope and Coverage

The sDQI evaluation encompasses 87 scheduled commercial banks and focuses on their key supervisory returns. The assessment covers critical areas including:

• Asset quality reporting
• Risk-based supervision data
• Liquidity metrics
• Capital adequacy information

These returns form the foundation of the RBI's supervisory framework and are essential for effective banking regulation and oversight.

Regulatory Significance

The RBI emphasized that the sDQI provides a quantitative measure of supervisory data quality, which forms the basis for supervisory examinations. This systematic approach to data quality assessment enables more effective regulatory oversight and helps identify areas where banks may need to strengthen their reporting processes.

The consistent improvement in scores demonstrates the banking sector's commitment to maintaining high standards in regulatory compliance and data management practices.

The Reserve Bank of India has proposed significant changes to dividend payout norms for banks, introducing a graded structure based on capital adequacy levels. Under the draft Commercial Banks – Prudential Norms on Declaration of Dividend and Remittance of Profits Directions, 2026, the regulator has raised the dividend payout cap for banks to 75% of net profit from the earlier 40% rule, with implementation scheduled for financial year 2026-27.

Graded Structure Based on CET1 Capital Levels

The RBI has introduced a comprehensive graded framework linking dividend payouts to Common Equity Tier 1 (CET1) capital ratios. Stronger banks with more than 20% CET1 would be allowed to pay 100% of adjusted net profit, which is calculated as net profit minus net non-performing assets for the dividend payment year. However, this remains subject to the overall 75% dividend payout limit.

Special Requirements for Systemically Important Banks

Systemically important banks face even stricter capital requirements for maximum dividend payouts. State Bank of India would need a minimum 20.80% CET1 ratio to pay 100% dividend of adjusted net profit, while HDFC Bank and ICICI Bank would require minimum CET1 ratios of 20.40% and 20.20% respectively.

Enhanced Oversight and Eligibility Criteria

The central bank has established specific conditions that banks must meet before declaring dividends. Bank boards are required to oversee asset quality and provisioning gaps, capital projection and long-term growth plans before declaring dividends. Banks must maintain positive adjusted profit after tax for the period for which dividend is proposed and meet minimum capital adequacy norms.

The regulatory framework establishes differentiated payout limits based on bank categories, with regional rural banks and local area banks facing a higher cap of 80% of profit after tax compared to the 75% limit for commercial banks.

Foreign Banks and Compliance Measures

Foreign banks operating in India through branch mode can remit dividends or surplus without prior RBI approval. However, if excess remittance is found on audit, the head office must return the excess remittance and make good the shortfall. For all banks, any exceptional or extraordinary income, or profit overstatement identified in statutory auditor reports with modified opinions, shall be deducted from net profit calculations.

Public Consultation and Implementation

Stakeholders can submit comments on the draft directions until February 5 through the 'Connect2Regulate' section on the RBI's official website. The comprehensive review reflects the RBI's ongoing efforts to align prudential norms with evolving banking practices while maintaining appropriate regulatory oversight of dividend policies across different categories of banking institutions operating in India.