State-run banks seek dividend relief from government: Report

State-run banks have sought a lesser dividend payout for the current fiscal (2022-23) as they look forward to shore up their capital reserves in the wake of banking turmoil globally.

"Given the current stress in the global banking sector, it is important that banks have that extra capital to absorb any systemic shocks," an Economic Times report quoted a banker, who requested anonymity, as saying.

The discussions are ongoing between the bankers and the government and a meeting has already happened in February on the issue, the report in the Economic Times quoted another banker as saying.

The state-run banks saw record profits in the current fiscal and any relief extended on the dividend front to banks could chip away at the government's fiscal deficit number pegged at 6.4% especially as the divestment receipts are likely to disappoint.

An extra buffer will help banks from any systemic shocks that could emanate from the global banking jitters.

The government has pegged Rs 40,953 crore as dividend from the RBI and public sector banks for the current fiscal. The revised estimate for the current year itself is 44.6 percent lower than the budget estimate of Rs 73,948 crore.

The Union government has pegged next year's dividend from the RBI and PSBs at Rs 48,000 crore.

Two regional American banks, Silicon Valley Bank and Signature, collapsed recently and the largest Swiss bank UBS has agreed to rescue crisis-hit Credit Suisse in a deal brokered by the government.