Dividend payout for public sector banks may cross Rs 15,000 crore in FY24

Dividend payouts: Public sector banks (PSBs) are likely to dispense a dividend in excess of Rs 15,000 crore for the March 2024 fiscal as a result of enhanced profitability, as per sources. 

All 12 PSBs in the initial three quarters of the present financial year garnered a total profit of Rs 98,000 crore which is only Rs 7,000 crore short of the whole of FY23. 

PSBs earned the highest-ever aggregate net profit of Rs 1.05 lakh crore during FY23 as against Rs 66,539.98 crore earned in 2021-22. 

Consequently, the government earned a 58 per cent higher dividend of Rs 13,804 crore, more than the Rs 8,718 crore allocated in the preceding financial year. 

The dividend payout to the government will also be higher as the profit in the current financial year would be much greater than the last year, as per the sources. 

Considering past records, the dividend payout for FY24 should exceed Rs 15,000 crore, they added. 

In January this year, the Reserve Bank’s draft guidelines put forth for such banks to declare dividends, who had a net non-performing assets (NPAs) ratio of less than 6 per cent. 

The pre-existing norms which were last updated in 2005 mandated for banks to have an NNPA ratio of up to 7 per cent in order to be eligible for declaring dividends.

The new guidelines should be in effect from FY25 onwards, the central bank proposed.

According to the draft, the boards of banks need to follow directions including consideration on divergence in classification and provisioning for NPAs, while considering proposals of dividend payouts. 

It is required for a commercial bank to have a minimum total capital adequacy of 11.5 per cent for being eligible to declare dividends, as per the circular.

(With PTI Inputs)