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 recently said.
The three banks have requested for “exemption from payment of dividend” on account of decrease in profit due to higher provisioning against non-performing assets (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 Rs1,00,651 crore. The revised estimate for the last fiscal was Rs88,781 crore.
In 2014-15, Union Bank of India had deferred its plan to raise Rs1,386 crore fund through qualified institutional placement (QIP) to the current fiscal. There are 24 listed public sector banks. The three banks will be announcing their 2014-15 annual results in the coming days. Union Bank of India had reported a 13.33 per cent decline in net profit at Rs302.42 crore for the October - December quarter of 2014-15. The bank had a net profit of Rs348.94 crore in the third quarter of 2013-14 fiscal.
Bank of India had posted a profit of Rs 173.38 crore during the period, down from Rs585.82 crore in October- December quarter of 2013-14. Allahabad Bank’s profit during the period had almost halved to Rs164 crore year-on-year.