This study attempted to investigate capital market efficiency and share price behavior in the context of dividend distribution to the shareholders during the period of 10 years from 2013 to 2024. The sample is made up of 12 Public Sector Banks (PSBs) listed on the National Stock Exchange (NSE) and their 58 final dividend announcements. The NSE official website and Money Control provided all of the dividend announcement data. To calculate the residual, the NSE Nifty 50 index is utilized as a market proxy. The anomalous returns were computed using the market model and standard event study technique, and the statistical significance was tested using the t-test. According to the study, AAR is favorable for 48% of the 21-day period and only for 4 days (-4 to -7), with none of the days being significant before the announcement. After the event day, the AAR reacted adversely for 5 days and positive for 5 days and is insignificant for all days except day 6 found significant at 5% level. Furthermore, the AAR after announcement surrounding day is negative (except day +1 to +3 and +5). This indicates that the market overreacted earlier and then corrected itself in subsequent days, highlighting the efficiency of the market.