The changes allow banks to pay up to half their earnings in dividends, with the cap to remain in place until July 1, 2022, given persisting uncertainties, the central bank said in a statement.
It, however, cautioned the banks to be prudent in their approach and consider the need to meet higher capital requirements resulting from the RBNZ's capital review.
"We have delayed the implementation timetable of the Capital Review twice over the course of last year to allow banks the regulatory relief needed to support their customers.
"As economic conditions improve, building strong capital buffers needs to be prioritised," Reserve Bank Deputy Governor Geoff Bascand said.
The move comes after the central bank earlier this month removed some temporary liquidity facilities it had put in place during the pandemic as market conditions improved.
