LIC hands FM Sitharaman ₹12,207 crore dividend cheque for FY 2025-26
Synopsis
Finance Minister Nirmala Sitharaman collected over ₹15,271 crore in dividends in a single day from LIC, Union Bank of India, and New India Assurance — a windfall that reflects a deeper story: public sector banks have just posted their highest-ever combined net profit of ₹1.98 lakh crore, with bad loans at a historic low of 1.93 per cent. Four straight years of profitability signal a genuine turnaround, not just a one-year blip.
Key Takeaways
Finance Minister Nirmala Sitharaman received a dividend of ₹12,207 crore from LIC for FY 2025-26 on 29 July .
Additional dividends received: ₹2,853 crore from Union Bank of India and ₹211 crore from New India Assurance — totalling over ₹15,271 crore .
Public Sector Banks posted a combined net profit of ₹1.98 lakh crore in FY 2025-26, an all-time high and an 11.1 per cent year-on-year rise.
GNPA ratio fell to a record low of 1.93 per cent ; Net NPA ratio dropped to 0.39 per cent as on 31 March 2026 .
PSB aggregate business reached ₹283.3 lakh crore , up 12.8 per cent year-on-year.
Every PSB maintained a provisioning coverage ratio above 90 per cent , signalling strong balance sheet resilience.
Finance Minister Nirmala Sitharaman on Wednesday, 29 July received a dividend cheque of ₹12,207 crore from the Life Insurance Corporation of India (LIC) for FY 2025-26, as the government collected a fresh round of payouts from major public sector financial institutions. The handover was made by R. Doraiswamy, Managing Director and Chief Executive Officer of LIC, according to an official post on X.
Dividend Receipts from Public Sector Institutions
Beyond the LIC payout, Sitharaman also received a dividend cheque of ₹2,853 crore for FY 2025-26 from Asheesh Pandey, MD and CEO of Union Bank of India. Additionally, Girija Subramanian, Chairman-cum-Managing Director of The New India Assurance Co. Ltd, handed over a dividend cheque of ₹211 crore for the same financial year. Together, the three payouts amount to over ₹15,271 crore flowing back to the government from state-owned financial entities.
Public Sector Banks Post Record Profits
The dividend handovers come against the backdrop of a landmark year for public sector banks. According to Finance Minister Sitharaman's post on X, Public Sector Banks (PSBs) recorded a combined net profit of ₹1.98 lakh crore in FY 2025-26 — an all-time high — reflecting an 11.1 per cent year-on-year increase. This marks the fourth consecutive year of profitability for PSBs, a streak attributed to sustained reforms and strengthened governance frameworks.
Asset Quality at Historic Lows
The Gross Non-Performing Assets (GNPA) ratio of public sector banks declined to a record low of 1.93 per cent as on 31 March 2026, while the Net NPA ratio fell to 0.39 per cent — both historically low levels of stressed assets, according to an earlier Finance Ministry statement. Every PSB maintained a provisioning coverage ratio above 90 per cent, indicating prudent risk management and stronger balance sheet resilience.
Aggregate Business and Credit Growth
The aggregate business of public sector banks reached ₹283.3 lakh crore as on 31 March 2026, registering a growth of 12.8 per cent over the previous year. The Finance Ministry attributed the improvement to healthy credit expansion, higher income, and improved asset quality working in tandem. This comes amid a broader push by the Centre to position PSBs as engines of economic growth following years of balance-sheet repair.
What This Signals
The scale of dividends received — particularly LIC's ₹12,207 crore payout — underscores the improving financial health of government-owned institutions and their growing capacity to contribute to the Union Budget's non-tax revenue. Notably, LIC's dividend to the government has grown substantially in recent years as the insurer's investment income and premium collections have strengthened post its 2022 IPO. Analysts will now watch whether the strong PSB profit cycle sustains into FY 2026-27 amid global uncertainty.
Point of View
207 crore LIC dividend is headline-worthy, but the more consequential data point is PSBs collectively earning ₹1.98 lakh crore in net profit — four years running. A decade ago, these same banks were drowning in bad loans that required repeated government bailouts. The GNPA ratio touching 1.93 per cent is a structural shift, not a seasonal blip. The real question now is whether this clean-up holds as global credit conditions tighten and retail loan growth — which has driven much of the recovery — faces affordability headwinds. The government's dividend harvest is real; whether the underlying health is durable is still being tested.
NationPress
29 Jul 2026
Frequently Asked Questions
How much dividend did LIC pay to the government for FY 2025-26?
LIC paid a dividend of ₹12,207 crore to the government for FY 2025-26, handed over to Finance Minister Nirmala Sitharaman on 29 July by LIC's MD and CEO R. Doraiswamy.
Which other institutions paid dividends to FM Sitharaman on 29 July?
Union Bank of India paid ₹2,853 crore and New India Assurance paid ₹211 crore in dividends for FY 2025-26, bringing the total received on that day to over ₹15,271 crore.
What was the net profit of public sector banks in FY 2025-26?
Public sector banks recorded a combined net profit of ₹1.98 lakh crore in FY 2025-26 — an all-time high — representing an 11.1 per cent increase over the previous year and the fourth consecutive year of profitability.
What is the current GNPA ratio of public sector banks?
The Gross NPA ratio of public sector banks declined to a record low of 1.93 per cent as on 31 March 2026, while the Net NPA ratio fell to 0.39 per cent, according to a Finance Ministry statement.
Why is LIC's dividend significant for the government?
LIC's dividend is a key source of non-tax revenue for the Union Budget. The growing payout reflects LIC's strengthened financials since its 2022 IPO, including higher investment income and premium collections, and directly supports the government's fiscal position.
