(HT)
The government expects to garner ₹20,000-25,000 crore in fiscal year 2025 (FY25) dividends from public sector banks, which have scored record profits and notched up sustained growth, two people familiar with the matter said, requesting anonymity.
The projected inflow will strengthen non-tax revenue and support the government’s fiscal consolidation efforts.
The Centre received about ₹18,000 crore in dividends from state-owned lenders in FY24 and ₹13,804 crore in FY23.
This optimistic outlook follows a record ₹1.78 lakh crore in combined net profit posted by all 12 public sector banks in FY25, marking a 26% increase over the previous year’s ₹1.41 lakh crore.
The payouts will be accounted for in FY26 by the Centre.
“The strong financial performance of public sector banks will yield higher dividends this year,” the first person mentioned above said.
“Higher dividends from PSU banks will enhance the government’s capacity to fund key initiatives without increasing the fiscal deficit,” the person added.
Central capital expenditure increased by 47.7% annually in the third quarter (Q3) of FY25, surpassing the 10.3% growth recorded in Q2, on the back of higher post-election spending.
Capital expenditure by major states grew by 5.9% in Q3 FY25, following contractions in both Q1 and Q2.
“Robust dividend inflows from PSU banks provide the government with greater fiscal flexibility to pursue growth-oriented programmes and capex spending,” the second person said.
“Coupled with steady loan growth and the potential for an RBI (Reserve Bank of India( rate cut, along with a favourable monsoon, these factors are expected to accelerate economic momentum in the coming quarters,” added the person mentioned above.
