The government is likely to emerge as one of the biggest beneficiaries of the whopping payout by several leading Public Sector Banks and likely to receive approximately Rs 8000 crore dividend. The many state-run banks have registered good performance in the current financial year barring Central Bank of India.
The massive payouts by PSBs is likely to provide immense relief to the government amid the surging inflation. Recently, Nirmala Sitharaman announced a cut in central excise duty on petrol by Rs 8/litre and on diesel by Rs 6/litre. The step was taken to bring down the soaring prices of petrol by as much as Rs 9.5/litre and diesel by Rs 7/litre. The central government decision to cut the excise duty sharply would have revenue consequences of nearly Rs one lakh crore yearly.
Recently, India's retail inflation, measured by the Consumer Price Index (CPI) surged to 7.79 percent in the month of April due to rising fuel and food prices, according to the data released by the statistics ministry.
In such a scenario, it became difficult for government to raise funds as it offered subsidies and tax cuts to keep the mounting inflation under control. Meanwhile, RBI has also given its nod to the payout to the government for the current financial year ending March 2022.
The public sector banks witnessed loan growth and improvement in asset quality and it helped them pay handsome dividends to their shareholders after a span of six years.
Government is expected to get Rs 3600 crore from India's leading lender State Bank Of India while Union Bank will shell out Rs 1084 crore. Canara Bank has decided to pay Rs 742 crore and both Bank of India and Indian Bank would pay more than Rs 600 crore.