The Hindu : Govt. asks banks to pay interim dividends

Online edition of India's National Newspaper
Saturday, Nov 22, 2003

Business

Business

Govt. asks banks to pay interim dividends

NEW DELHI NOV. 21. Taking advantage of the robust financial health of public-sector banks, the Union Government has asked them to pay interim dividends as part of efforts to contain fiscal deficit within 5.6 per cent of GDP.

"We have written to all public sector banks to pay interim dividends in the third quarter of this fiscal. Last fiscal, the banks paid about Rs. 800 crores and we expect it to be more this fiscal in view of the robust performance,'' a Finance Ministry official said here today.

He said the performance of the banks was robust last fiscal with net profits growing by about 50 per cent and the trend was expected to continue this year also.

Moreover, the non-performing assets of the banks had come down significantly in the first half of this fiscal.

At least three PSBs — Dena Bank, Punjab and Sind Bank and Bank of Maharashtra — also plan to tap the market to raise fresh capital.

Dena Bank plans its second public offer to raise about Rs. 70-80 crores while P&S Bank and Bank of Maharashtra were planning to raise about Rs. 100 crores each through public offers this fiscal.

On P&S Bank, the official sought to allay fears of any irregularities in the bank and said the Chairman, N. S. Gujral, had gone on four-week leave from November 14 and the committee of directors was managing the bank right now.

The Finance Ministry did not rule out another buyback of government securities but the official said there was no such plans as of now.

On return of capital to Government, the official said no decision had been taken yet. He said the banks were gearing up for implementing the real time gross settlement system by January 2004, as announced by the Reserve Bank of India.

Banks are also trying to build up an interest rate fluctuation reserve up to 5 per cent of their portfolio size to cover against the volatile movement in interest rates.

Printer friendly page
Send this article to Friends by E-Mail

Business