Indian Bank withdraws plans to pay dividend after RBI censures proposal

The only state-run Indian lender that isn’t part of a Rs 14 billion capital infusion by the government withdrew plans to pay a dividend after the central bank censured the proposal.
 

Indian Bank has avoided some of the bad-loan issues plaguing its peers by focusing on consumer lending. Still, the Reserve Bank of India advised that the lender withhold a planned dividend till trading losses on government debt, gratuity and provisions were fully provided for, the Chennai-based bank said in an exchange filing on Thursday.
 

India is struggling to resolve Rs 210 billion in stressed debt, nearly 90 per cent of which lies with state-run banks.

While its peers have struggled to recover loans made to companies, Indian Bank’s focus on retail lending has helped more than double its share price over the past two years. All nine analysts tracking the lender rate it a buy or hold, according to data compiled by Bloomberg.
 

The bank had recommended payment of Rs 6 per share last month for the year ended March 31. It decided to withdraw that resolution given it deferred providing for Rs 5.47 billion of trading losses and gratuity expenses of Rs 243 million, according to the statement.
 

The bank’s shares lost 0.1 per cent as of close of trading in Mumbai on Thursday, extending this year’s losses to 8 per cent. The other 11 members of the NSE Nifty PSU Bank Index have fallen by more, dragging the gauge back 25 per cent in 2018.