PSBs may seek pause on paying govt dividends

Public sector banks (PSBs) are considering asking the government to allow them to not pay it a dividend as they look to conserve capital before the expected loss-based approach for loan loss provisioning kicks in, likely from April 1, 2025.

In January, the Reserve Bank of India (RBI) released a discussion paper on the expected loss-based approach for loan loss provisioning. Last week, the government asked public sector banks to conduct a detailed study on the impact of such a norm on their capital position.

At present, banks make provisions on incurred loss, that is, once an account is overdue for more than 90 days, they set aside capital, known as provision.