Govt may tap PSBs for higher dividend

The dividends could help cut down the fiscal deficit in 2024-25

- Rhik Kundu & Subhash Narayan

The central government may seek higher dividends from state-owned banks in the next fiscal year on the back of their strong performance, while dividend from the Reserve Bank of India (RBI) may be on similar levels or a tad lower than the record high of the current fiscal, two people aware of the matter said.

Public sector banks (PSBs), which have received capital infusion from the government and executed various reform initiatives over the years, have seen marked reduction in bad loans and rising advances.

Profits reported by state-owned banks have crossed ₹98,000 crore in the first three quarters of 2023-24, and are expected to exceed ₹1.3 trillion by its end.

In fact, a record RBI dividend of ₹87,416 crore in 2023-24 helped the Centre revise its budget estimates. "One of the reasons we were able to target 5.8% (fiscal deficit) during 2023-24, from earlier projections of 5.9% was the more than expected dividend received from RBI," the second person mentioned above said on the condition of anonymity.