The authorities is ready to earn an fairness dividend of almost Rs 13,800 crore from the listed public-sector banks (PSBs), all 12 of them, for FY23, up 50 per cent from Rs 9,210 crore in FY22.
This would be the highest ever dividend for the federal government from PSBs.
The 12 PSBs in our pattern are paying an fairness dividend of almost Rs 21,000 crore for FY23, up 53 per cent from Rs 13,710 crore for FY22.
This was the very best yr for PSBs in phrases of earnings and dividend cost (see the charts).
Among particular person PSBs, development in dividend payouts was pushed by State Bank of India (SBI), which declared Rs 10,085 crore, of which Rs 5,740 crore goes to the federal government.
SBI accounted for 48 per cent of the dividends paid by PSBs in FY23 and 42 per cent of the federal government’s earnings from PSBs final monetary yr.
It was adopted by Bank of Baroda, which gave Rs 2,848 crore and Canara Bank Rs 2,177 crore.
The surge was pushed by a pointy leap within the revenues and web income of PSBs within the final two years.
The mixed web income of the listed PSBs grew to a record excessive of Rs 1.05 trillion in FY23, up 57.3 per cent from Rs 66,540 crore in FY22 and Rs 31,818 crore in FY21.
In comparability, on the peak of the unhealthy mortgage disaster, PSBs had reported a mixed web loss of little over Rs 76,000 crore in FY18, adopted by a web loss of almost Rs 59,800 crore in FY19.
For comparability, the PSBs’ mixed gross curiosity revenue was up 20 per cent year-on-year to Rs 8.51 trillion in FY23 from Rs 7.09 trillion a yr earlier.
In the identical interval, their revenues, together with charges and treasury revenue, had been up 15.7 per cent year-on-year to Rs 9.7 trillion.
Growth in PSBs’ revenues in FY23 was fuelled by an increase in lending charges and a restoration in loans.
On the earnings facet, PSBs gained from a pointy decline in provisions and contingencies for non-performing property (NPAs).
Provisions for NPAs had been down 9.7 per cent y-o-y to round Rs 97,000 crore in FY23, the bottom within the final eight years.
A pointy rise in dividend payout by PSBs shall be a fiscal increase for the federal government and assist it decrease the fiscal deficit.
Dividend revenue comes below non-tax revenues.
However, it should take years of excessive dividend payouts for the federal government to recuperate its giant incremental fairness funding in PSBs since FY15.
The PSBs’ paid-up capital, or the fairness shares owned by their shareholders, together with the federal government, was up greater than 5 instances throughout the interval from round Rs 13,900 crore on the finish of March 2015 to almost Rs 72,200 crore on the finish of March FY23.
Their fairness expanded throughout the interval as the federal government shored up their depleted capital.
As a end result, the ratio of fairness dividend to paid-up capital for PSBs was solely 0.29 in FY23, much less half the record excessive of 0.61 in FY13.
The ratio signifies the relative dividend yield for shareholders on their fairness funding within the firm.
The ratio is over 100 for the cash-rich and extremely worthwhile companies similar to Tata Consultancy Services and 19 within the case of HDFC Bank.