Govt expected to receive $2 billion in dividends from PSBs in next fiscal year
New Delhi: The public sector banks are reporting substantial profits and are likely to produce $2 billion in dividends for the next financial year, starting on April 1, media reports said.
This big jump from the ongoing financial year comes on the back of Prime Minister Narendra Modi’s measures aimed at enhancing the resilience of state-owned banks, such as consolidating weaker banks with stronger counterparts and enacting bankruptcy law to reclaim funds from defaulters, Reuters reported.
Further, over Rs 3.3 trillion ($39.7 billion) has been allocated towards recapitalizing distressed banks.
Finance Secretary Vivek Joshi on Monday said the government expects receiving a minimum of Rs 150 billion ($1.8 billion) in dividends from state banks during the fiscal year 2024/25. This projection represents an increase of 8.7% or more compared to the expected Rs 138 billion for the current fiscal year ending in March, said the Reuters report.
"This is a conservative estimate (about dividends)," Joshi, told Reuters in a post-budget interview, underscoring that net profits of government-owned banks, including India's largest lender, State Bank of India, were set to surpass Rs 1 trillion ($12 billion) in the current fiscal year, fuelled by strong credit demand.
The 12 state-run banks have registered cumulative net profits of Rs 980 billion in three quarters ending December, Joshi told Reuters.
According to Reserve Bank of India’s (RBI) data, the asset quality of state banks has shown improvement over the years, with gross non-performing assets (GNPAs) decreasing to 3.2% in September 2023 from 9.6% in the March 2017 quarter.
Finance Minister Nirmala Sitharaman, during the presentation of the interim budget last week, projected that the government would receive dividends totalling Rs 1.02 trillion ($12.3 billion) from the RBI, state banks, and financial institutions in the fiscal year 2024/25, compared to Rs 1.04 trillion in the current financial year.
Each year, a large portion of the dividends originate from the nation's central bank. In the current fiscal year, the Reserve Bank of India (RBI) disbursed Rs 874.16 billion in dividends to the government.
Joshi noted that state banks have raised Rs 430 billion through markets in the current fiscal year, a slight decrease from the Rs 450 billion raised in the previous fiscal year. This suggests that banks are becoming less reliant on budgetary support.
Support Our Journalism
We cannot do without you.. your contribution supports unbiased journalism
IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.
Support objective journalism for a small contribution.
