Public sector banks' dividend set to surpass Rs 15,000 crore mark
In the first three quarters of the current financial year, all 12 PSBs collectively earned a total profit of Rs 98,000 crore
image for illustrative purpose
Hyderabad: Public sector banks (PSBs) are expected to pay a dividend exceeding Rs 15,000 crore for the financial year ending March 2024, driven by improved profitability, sources revealed.
In the first three quarters of the current financial year, all 12 PSBs collectively earned a total profit of Rs 98,000 crore, just Rs 7,000 crore shy of the entire FY23 profit.
FY23 saw PSBs achieving their highest-ever aggregate net profit of Rs 1.05 lakh crore, compared to Rs 66,539.98 crore in 2021-22. Consequently, the government received a dividend of Rs 13,804 crore, marking a 58 percent increase from the Rs 8,718 crore paid in the previous financial year. Sources indicated that given the expected higher profit this year, the dividend payout to the government is also anticipated to increase, likely exceeding Rs 15,000 crore for FY24.
Earlier in January, the Reserve Bank, in its draft guidelines, proposed allowing banks with a net non-performing assets (NPAs) ratio of less than 6 percent to declare dividends.
Currently, banks must have an NNPA ratio of up to 7 percent to be eligible for dividend declaration, as per norms last updated in 2005.
The proposed new guidelines are expected to take effect from FY25 onwards. The draft guidelines outline specific directions for banks' boards to consider when proposing dividend payouts, including factors like divergence in classification and provisioning for NPAs.
The circular also stipulates that a commercial bank should maintain a minimum total capital adequacy of 11.5 percent to be eligible for declaring dividends.
