3 PSU Banks Seek Exemption From Dividend Payment
Three public sector banks - Bank of India, Union Bank of India and Allahabad Bank - have sought exemption from payment of dividend citing higher provisioning for non-performing assets (NPAs).
"These banks want to improve capital adequacy by ploughing back the profits as they are not finding conducive conditions to raise capital from the market," the Finance Ministry said recently.
The three banks have requested for "exemption from payment of dividend" on account of a decrease in profit due to higher provisioning against bad loans (NPAs).
As per the Budget Estimates 2015-16, the projections from 'dividend and profit' from public sector companies and banks has been pegged at about Rs 1,00,651 crore. The revised estimate for the last fiscal year was Rs 88,781 crore.
In 2014-15, Union Bank of India had deferred its plan to raise Rs 1,386 crore fund through qualified institutional placement (QIP) to the current fiscal year.
There are 24 listed public sector banks.
The three banks will be announcing their annual results for 2014-15 in the coming days.
Union Bank of India had reported a 13.33 per cent decline in net profit at Rs 302.42 crore for the October-December quarter of 2014-15. The bank had a net profit of Rs 348.94 crore in the third quarter of fiscal year 2013-14.
Bank of India had posted a profit of Rs 173.38 crore during the period, down from Rs 585.82 crore in October-December quarter of 2013-14.
Allahabad Bank's profit during the period had almost halved to Rs 164 crore year-on-year.
Government has approved dilution of equity share holding of 52 per cent based on the credit growth, available capital, market valuation and performance of the bank.
The dilution of holding based on efficiency parameters is aimed at ensuring that credit needs of banks are taken care of.
3 PSU Banks Seek Exemption From Dividend Payment Reviewed by sambasivan srinivasan on 8:08:00 AM Rating: