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Three Public Sector Banks Seek Exemption from Payment of Dividend

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Published on : May 05, 2015

Out of the 24 listed public sector banks in India, Bank of India, Allahabad bank, and Union Bank of India has sought exemption from the payment of dividend, owing to the high provisioning for the non-performing assets. Based on credit growth, market valuation, performance of the bank, and available capital, the government has recently approved of diluting the equity share holding of 52 percent. The Finance Ministry revealed that the non-performing assets have hit the profits of the banks and the three banks have clarified that they are not finding conductive conditions to raise capital from the market and hence, have sought exemption from the payment of the dividend. 

The Budget Estimates 2015-16 has projected Rs 1,00,651 crore as ‘dividend and profit’ from public sector banks and companies. The revised estimate for the last fiscal year was Rs 88,781 crore. The three banks are aiming to improve their capital adequacy by reinvesting the profits. The banks are going to announce their annual results for the financial year 2014-15 in the coming days. 

In the third quarter of 2014-15, Union Bank of India registered a 13.33 percent drop in its net quarterly profit of Rs 302.42 crore. It could not go ahead with its plan to raise fund worth Rs 1,386 crore, through qualified institutional placement in 2014-15. The bank had reported a net profit of Rs 348.94 crore during the same duration in the 2013-14 fiscal. Bank of India gained a profit of Rs 173.38 crore during the October-December quarter of 2014-15, which was lower than what it had earned in the same quarter of the previous fiscal. Allahabad Bank had its profit halved to Rs 164 crore year-on-year during the same period.