Capital restructuring norms for CPSEs updated to add value
value creation strategy.
It directed them to cough up an annual dividend of at least 30% of their net profit or 4% of their net worth, whichever is higher. As per the earlier norms, the dividend payment requirement was 30% of the profit after tax or 5% of net worth, whichever was higher.
The latest norms, however, specify that financial sector CPSEs like non-banking financial companies need to pay a minimum annual dividend of 30% of their profit after tax, subject to any limit under any extant legal provisions, according to the revised guidelines issued by the Department of Investment and Capital Asset Management (DIPAM). There was no separate directive for financial sector CPSEs in the guidelines issued in 2016. Any exemption from this requirement has to be sought from the finance ministry.
The revised guidelines would further boost the value of the CPSE and total returns for the shareholders while leaving them with more operational and financial flexibility to improve their performance. It would also encourage more investors to participate in the CPSE value creation, a strategy that the government has been pursuing in recent years.
The revised guidelines will be applicable from the current fiscal.
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