No government pressure on state-owned lenders to raise dividend: Bankers

State-owned lenders on Monday said there was no pressure on them to raise dividend payouts to the government, which has been holding parleys with PSUs on the subject.

"PSUs and banks are different. Banks are capital intensive business. They (government) are quite aware that if more dividend is taken from banks, to that extent the capital drops and the government would have to pump in capital," SBI Chairman Pratip Chaudhuri said after a meeting of bankers with the Finance Ministry.

"There is no particular pressure or push to ramp up dividend. They were just trying to make an estimate what is the likely dividend," he said, adding, "There was no particular direction to have higher dividend."

According to Union Bank of India Executive Director S S Mundra, the government is not asking for any particular dividend. “They are trying to assess how the profitability would pan out," Mundra said.

"The bank paid 110 per cent last year. The Finance Ministry is making an assessment on how much dividend needs to be paid this year," Canara Bank Chairman and Managing Director S Raman said.

Pressed hard for funds, Finance Ministry officials are meeting the heads of PSUs to persuade them to increase dividend payment to the government.

The government is seeking higher dividends to tide over the financial problems which got aggravated because of rising subsidy bill and slow progress on the disinvestment front.

There are apprehensions that the Centre's fiscal deficit -- the gap between overall revenue and expenditure – is likely to exceed the Budget estimate of 4.6 per cent of GDP in this fiscal.

While the subsidy bill during the current fiscal is expected to shoot up by an additional Rs 1 lakh crore, the government is unlikely to meet the disinvestment target of Rs 40,000 crore. It has already announced borrowing an additional Rs 90,000 crore to bridge the revenue-expenditure gap.

Under the existing norms, profit-making PSUs are required to declare a dividend of at least 20 per cent of the government's equity investment, or 20 per cent of post-tax profit, whichever is higher.

Meanwhile, at the meeting with the PSU chiefs in sectors like steel, coal, mines, power and oil in the past few days, the officials failed to obtain assurances for larger dividend receipt from state-owned companies.

While a majority of the PSUs said they would retain the dividend paid last year, as paying out of their cash reserve would hinder their expansion plans, oil companies have hinted that the final dividend would be decided after assessing the under-recoveries and subsidy provided by the government.

The Finance Ministry has already discussed the issue with PSUs like SAIL, NALCO, PFC, REC, ONGC, IOC and Oil India among others.