- News>
- Economy
Banks cease to be `milking cows` of govt after RBI`s new norms
New Delhi, May 12: Welcoming RBI`s new norms limiting dividend payout to one-third of profits, bankers today said they will no longer be the `milking cows` of government for bridging its fiscal deficit.
New Delhi, May 12: Welcoming RBI's new norms limiting dividend payout to one-third of profits, bankers today said they will no longer be the "milking cows" of government for bridging its fiscal deficit.
But banks are worried about the 3.0 per cent NPA level for automatic declaration of dividend and asked for relaxation in view of leeway in securitisation act and shorter time
period for declaring loans as NPAs.
Welcoming the RBI guidelines effective from March, a top official of a PSU bank told: "Dividend payout should not be at the cost of banks' financial strength."
"RBI had placed a cap of 33.33 per cent on such income payout on the profits. With this, we will no longer be the milking cows," he said.
"Many a times, banks were forced to shell out larger dividends mainly to bridge the burgeoning fiscal deficit, which the government has not been able to rein in so far," another banker said.
Just by revising upwards the GDP figures do not mean that the fiscal deficit (in absolute terms) could be wished away, he said.
The banking regulator had mandated that only those banks with capital adequacy ratio (car) of at least 11 per cent and a net non-performing assets of below 3.0 per cent would be eligible to declare dividends without prior approval from it.
Referring to the new car mandate, bankers noted that there was a "duality" in the RBI norms, since banks are already required to keep it at a minimum 9.0 per cent to meet the prudential guidelines.
Bureau Report
Welcoming the RBI guidelines effective from March, a top official of a PSU bank told: "Dividend payout should not be at the cost of banks' financial strength."
"RBI had placed a cap of 33.33 per cent on such income payout on the profits. With this, we will no longer be the milking cows," he said.
"Many a times, banks were forced to shell out larger dividends mainly to bridge the burgeoning fiscal deficit, which the government has not been able to rein in so far," another banker said.
Just by revising upwards the GDP figures do not mean that the fiscal deficit (in absolute terms) could be wished away, he said.
The banking regulator had mandated that only those banks with capital adequacy ratio (car) of at least 11 per cent and a net non-performing assets of below 3.0 per cent would be eligible to declare dividends without prior approval from it.
Referring to the new car mandate, bankers noted that there was a "duality" in the RBI norms, since banks are already required to keep it at a minimum 9.0 per cent to meet the prudential guidelines.
Bureau Report