Government to Amend 2016 CPSE Guidelines for Dividend, Bonus Issues, and Share Buyback

The government is set to amend its 2016 guidelines on dividend payment, bonus issues, and share buyback by Central Public Sector Enterprises (CPSEs). With improved market capitalisation and balance sheets, CPSEs are due for updated capital restructuring guidelines to ensure optimal management of surplus funds and maintain investor interest.

The government is poised to revise its 2016 guidelines regarding dividend payments, bonus issues, and share buybacks by Central Public Sector Enterprises (CPSEs), senior officials have disclosed. The comprehensive guidelines initially issued by the finance ministry aimed at ensuring efficient management of government investments in CPSEs.

With CPSEs now demonstrating stronger balance sheets and improved market capitalisation, an official emphasized the necessity for a re-evaluation of these capital restructuring guidelines. Another official indicated that the amended guidelines are expected this month. The 2016 guidelines stipulated that CPSEs should pay a minimum annual dividend of 30% of Profit After Tax or 5% of net worth, and companies with sufficient net worth and cash reserves must consider share buybacks and bonus shares issuances.

The directive aimed at CPSEs sitting on surplus cash to pay dividends to keep investor interest has yielded results, with the combined market capitalisation of CPSEs, banks, and insurance companies growing over 500% in the past three years. In the fiscal year 2024-25 alone, CPSEs have contributed Rs 10,604.74 crore through dividends, helping the government meet its budgeted target of Rs 56,260 crore.

(With inputs from agencies.)