India Pushes State-Run Firms for Higher Dividend Payouts, Targets ₹900 Billion in FY26

The Indian government has revised its dividend payout norms for Central Public Sector Enterprises (CPSEs), aiming to generate ₹900 billion ($10.5 billion) in dividends by March 2026. The move is part of a broader strategy to maximize returns from state-run firms, ensuring efficient capital utilization and enhanced investor confidence.

 

Key Highlights

 

Higher Dividend Payouts Mandated:

 

CPSEs must now pay at least 30% of profit after tax (PAT) or 4% of net worth, whichever is higher.

 

Financial sector CPSEs, including NBFCs, must adhere to the 30% PAT rule.

 

Government’s Revenue Target:

 

The government aims to collect ₹900 billion in dividends from CPSEs by March 2026.

 

The funds will be used to support fiscal consolidation and infrastructure projects.

 

Stock Market Reaction:

 

PSU stocks surged up to 6%, with IRFC, BHEL, REC, and PFC leading gains.

 

The Nifty PSE index rose 2%, reflecting investor optimism.

 

Share Buyback & Bonus Issue Norms:

 

CPSEs with market prices consistently below book value for six months and a net worth of ₹3,000 crore may consider share buybacks.

 

Companies with reserves exceeding 20 times their paid-up equity capital can issue bonus shares.

 

Stock Split Guidelines:

 

Listed CPSEs with market prices exceeding 150 times face value for six months may split shares, with a mandatory three-year gap between splits.

 

Strategic Intent:

 

The revised norms aim to maximize returns for the government and investors, ensuring efficient capital utilization.

 

The policy aligns with India’s broader economic growth strategy, encouraging greater investor participation in CPSEs.

 

India’s new dividend policy signals a strong push for financial discipline and shareholder value, reinforcing CPSEs’ role in economic growth.

 

Source: Times of India, CNBC TV18, and Economic Times.