Hard pressed to meet the fiscal deficit target, the government has asked state-owned banks to pay interim dividend to help it mop up resources. Interim dividend payouts will help the government raise funds as the majority shareholder in public sector banks.
The Finance Ministry has indicated that all state-owned banks should pay dividend, depending on the strength of their balance sheets, sources said.
Union Bank of India on Wednesday declared an interim dividend of 27 per cent, or Rs .2.70 per share, for the current financial year.
Other public sector banks have lined up board meetings this week and the next to declare interim dividend. Oriental Bank of Commerce and Allahabad Bank will hold board meetings on January 11 to consider interim dividend.
Board meetings have been scheduled by Chennai-based Indian Bank on January 10 and IDBI Bank and Indian Overseas Bank on January 13 to decide on interim dividend.
In the previous financial year, 21 public sector banks paid a combined dividend of Rs. 6,803.63 crore.
Finance Minister P Chidambaram held a meeting with select PSU chiefs yesterday to discuss their capital expenditure plans and explore the possibility of getting higher dividend from them.
In the 2013-14 budget, the government has estimated garnering Rs. 29,870 crore as dividend from PSUs. An additional Rs. 43,996 crore is estimated to flow in from PSU banks and the Reserve Bank of India under the same head.
The government is banking on a dividend mop-up to keep its fiscal budget on track. — PTI