The Reserve Bank of India (RBI) will transfer a surplus of Rs 99,122 crore to the government for the nine-month accounting period ended March 31, the central bank has said.
The bank also decided to maintain the contingency risk buffer at 5.5 percent. The decisions were taken at the 589th meeting of the Central Board of Directors of RBI held under the chairmanship of Governor Shaktikanta Das on May 21. The RBI is required to maintain a contingency risk buffer of 5.5-6.5 percent of its balance sheet.
“With the change in the Reserve Bank’s accounting year to April-March (earlier July-June), the Board discussed the working of the Reserve Bank of India during the transition period of nine months (July 2020-March 2021)… The Board also approved the transfer of Rs 99,122 crore as surplus to the Central Government for the accounting period of nine months ended March 31, 2021 (July 2020-March 2021),” RBI said.
The transfer will help the government’s finances as the country battles a furious second coronavirus wave that has seen daily infections and deaths rise to a record level. The restrictions clamped to break the chain of infections have also put a question mark on the country’s economic recovery.
The board reviewed the current economic situation, global and domestic challenges and recent policy measures taken by the Reserve Bank to mitigate the impact of the second coronavirus wave on the economy.
Last year, the RBI transferred only 44 percent of its surplus, Rs 57,128 crore, to the government, the lowest transfer in the past seven years. In 2019, RBI transferred Rs 1,23,414 crore surplus to the government.
As the manager of its finances, every year the RBI pays a dividend to the government to help with the finances from its surplus or profit.
The RBI, founded in 1934, operates according to the Reserve Bank of India Act of 1934. The act mandates that profits made by the central bank from its operations be sent to the Centre.
“After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 2 [and for all other matters for which provision is to be made by or under this Act or which] are usually provided for by bankers, the balance of the profits shall be paid to the Central Government,” Section 47 of the RBI Act says.
News Source:- Moneycontrol