India earned Rs 11,000 crore as dividend from public sector banks (PSBs) in FY23, up by 27% from Rs 8,700 crore in FY22. The government received Rs 9,200 crore as dividend from PSBs in the first nine months of FY23, up by 31% from Rs 7,000 crore in the corresponding period of FY22.
The higher dividend from PSBs is due to a number of factors, including:
- Improved performance of PSBs: PSBs have performed better in recent years, thanks to a number of reforms, including asset quality management, capital infusion, and improved governance.
- Higher profitability of PSBs: PSBs have also been more profitable in recent years, thanks to higher interest income and lower provisioning costs.
- Reduction in government shareholding in PSBs: The government has been reducing its shareholding in PSBs, which has also led to higher dividends for the government.
The higher dividend from PSBs is a positive development for the government and for the Indian economy. The government will be able to use the dividend to fund its expenditure, while the Indian economy will benefit from the higher profitability of PSBs.
Here are some of the factors that contributed to the higher dividend from PSBs in FY23:
- Improved asset quality: The asset quality of PSBs improved in FY23, thanks to the implementation of the Insolvency and Bankruptcy Code (IBC). The gross non-performing asset (GNPA) ratio of PSBs declined to 7.5% in FY23 from 9.2% in FY22.
- Higher capital infusion: The government infused Rs 34,000 crore into PSBs in FY23, which helped to improve their financial position.
- Improved governance: The government has taken a number of steps to improve the governance of PSBs, such as the appointment of independent directors and the implementation of the Prompt Corrective Action (PCA) framework. These measures have helped to improve the performance of PSBs.
The higher dividend from PSBs is a positive development for the government and for the Indian economy. The government will be able to use the dividend to fund its expenditure, while the Indian economy will benefit from the higher profitability of PSBs.