The finance ministry, looking to raise resources to meet its revenue target, has directed all public sector banks that are grappling with bad loans to pay at least 20% dividend for the last fiscal year to boost its coffers even as banks.
In a letter to the banks last week, the ministry said they "will have to declare a minimum 20% of their capital or net profit, whichever is higher". Bank officials claim the government is desperately trying to bridge the fiscal deficit gap by directing them to pay higher dividends at a time when they fear their earnings could take a knock due to poor loan demand and rising bad loans.
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