‘Retained earnings cannot be used only for dividends, staff benefits’

Finance Minister P Chidambaram has urged banks to channelise a significant portion of their retained earnings for future capital requirements, rather than utilise them only for dividends and staff benefits.

It cannot be that all banks’ profits are used only to declare dividends and to provide enhanced wages and allowances to bank employees and staff, Chidambaram said at the 78th Foundation Day celebrations of Indian Overseas Bank (IOB) in the Capital on Monday.

While the claims of staff and employees should be duly acknowledged, recognised and fair and just settlements arrived at, there are other claimants to banks' profits, Chidambaram said

These remarks are significant as it came on a day bank employees across the country struck work to oppose the inadequate pay revision offer made by bank managements.

“Government is doing its part for capital infusion. But there is humungous need for capital as pointed out by the recent RBI report. Banks have to find their own capital from the retained earnings. Otherwise we cannot find the amount of capital required for the next 5-10-20 years,” he said.

Srivats.kr@thehindu.co.in

(This article was published on February 10, 2014)
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