APRIL 20249TOP STORIESPUBLIC SECTOR BANKS TO SHELL OUT RS.15,000 CRORES IN DIVIDENDSPublic sector banks (PSBs) in India are expected to pay a dividend exceeding Rs 15,000 crore for the financial year ending March 2024, driven by improved profitability. Sources indicate that in the first three quarters of the current financial year, all 12 PSBs collectively earned a total profit of Rs 98,000 crore, a mere Rs 7,000 crore less than their entire profit for the previous fiscal year (FY23).During FY23, PSBs achieved their highest-ever aggregate net profit of Rs 1.05 lakh crore, a significant increase from Rs 66,539.98 crore earned in FY22. Consequently, the government received a dividend of Rs 13,804 crore, marking a 58 percent increase from the previous financial year's dividend payout of Rs 8,718 crore.Given the expectation of higher profits in the current financial year compared to the previous year, sources anticipate that the dividend payout to the government for FY24 will likely exceed Rs 15,000 crore.In January, the Reserve Bank of India (RBI) proposed draft guidelines suggesting that banks with a net non-performing assets (NPAs) ratio of less than 6 percent would be eligible to declare dividends. This marks a change from the existing norms, last updated in 2005, which required banks to have an NNPA ratio of up to 7 percent to qualify for dividend declaration.The proposed guidelines, set to effect from FY25 onwards, outline specific directions for bank boards to consider when evaluating proposals for dividend payouts. These considerations include examining discrepancies in the classification and provisioning for NPAs.Additionally, the circular stipulates that a commercial bank must maintain a minimum total capital adequacy of 11.5 percent to be eligible for declaring dividends. ALTERNATIVE FUELS SLOWLY OVERTAKING TRADITIONAL FUEL VEHICLES: CARE EDGEAn analysis conducted by Care Edge Ratings reveals a notable shift in consumer demand within the automotive industry, indicating a progressive move away from vehicles powered by traditional fuels towards those utilizing alternative fuels. According to the analysis, the proportion of petrol vehicle sales, relative to total vehicle sales, has witnessed a substantial decline, dropping from 86 percent in 2020 to 76 percent in 2023. Similarly, the share of diesel vehicle sales has seen a slight decrease from 12 percent in 2020 to 11 percent in 2023.In contrast, the sales volume of vehicles powered by alternative fuels has experienced remarkable growth, surpassing 400 percent in Calendar Year 2023 compared to 2020, albeit from a smaller base. Electric vehicles (EVs) are particularly gaining traction, boasting the lowest lifetime cost among alternative fuel options, followed closely by Compressed Natural Gas (CNG). This surge in demand for EVs is attributed to various factors, including government incentives, declining battery costs, and escalating fuel expenses, particularly for petrol and diesel. India has set ambitious targets, aiming for 30 percent of all vehicle sales to be electric by 2030.To foster the expansion of charging infrastructure, the Indian government has introduced several initiatives aimed at incentivizing the development of alternative fuel infrastructure, such as subsidies and grants. Despite the higher upfront cost associated with EVs, their lower fuel and maintenance expenses, combined with government incentives, render them more cost-competitive in the long run, particularly for drivers covering extensive mileage.
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