The Securities and Exchange Board of India's decision to mandate India’s top 500 companies to formulate and disclose a dividend policy has been beneficial for investors, according to a report by shareholder advisory firm IiAS.

It found that 91 of the top 100 companies have a publicly available dividend distribution policy and of these, 15 companies are likely to distribute higher share of their profits as dividend.

Indian companies have been hoarding cash with the cash (including liquid investments) on S&P BSE 500 companies’ balance sheets as on March 31, 2016 aggregating Rs 16.7 lakh crore. These companies in FY16 announced aggregate dividends of Rs.1.8 lakh crore.

IiAS’ February 2017 analysis showed that despite this, conservatively, 88 of these companies could, in aggregate, pay out over Rs 25,000 crore more in dividends. Some of these companies returned cash to shareholders via buybacks in FY17 – the largest of these were undertaken by state-owned enterprises and TCS.

Bajaj Auto, Dabur, Dr Reddy’s Laboratories, HDFC Bank, Idea Cellular and Tata Steel are among those with higher dividend payouts now. Bajaj Finserve Ltd, ICICI Prudential Life Insurance and Tata Motors have rationalised their payouts.

In its new policy, SEBI has asked companies to include the following information in the dividend policy: a) the circumstances under which the shareholders of the listed entities may or may not expect dividend b) the financial parameters that shall be considered while declaring dividend c) internal and external factors that shall be considered for declaration of dividend d) policy as to how the retained earnings shall be utilised e) parameters that shall be adopted with regard to various classes of shares.

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