Saddled with mounting bad loans, as many as 16 public sector banks, including PNB, BoB and Canara Bank, skipped paying dividends in 2015-16, leading to a 67 per cent decline in government receipts to Rs.1,444.6 crore, a bulk of which came from State Bank of India.
Only six state-owned banks declared dividends, though at a lower rate for the fiscal ended March 2016. Under the existing guidelines, profit-making banks have to pay a minimum dividend of 20 per cent of their equity or 20 per cent of their post-tax profit, whichever is higher. The government, which is the majority shareholder in all the public sector banks, witnessed a 67 per cent decline in dividend receipts from PSU banks at Rs.1,444.6 crore. According to Finance Ministry data, the highest dividend was paid by SBI to the government at Rs.1,214.6 crore during 2015-16, 22 per cent lower than in the previous fiscal.As regards Union Bank of India, the dividend payout was one-third of the previous fiscal at Rs.85 crore. For Oriental Bank of Commerce, it was one-fifth compared to the previous financial year at Rs.12.4 crore despite an increase in government holdings due to capital infusion.
Banks which skipped dividend payments included Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Corporation Bank, Punjab National Bank, Dena Bank and Syndicate Bank.Balance sheet of most of the banks have been under stress due to the clean-up exercise targeted at non-performing assets. Due to heavy provisioning for bad loans, many banks posted losses in the last quarter of the previous fiscal.
Gross NPAs of the PSU banks had surged from 5.43 per cent (Rs 2.67 lakh crore) in 2014-15 to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16 of the total advances. Banks have been given time till March 2017 to clean up their balance sheet.
