RBI To Pay Rs 28,000 Crore Interim Dividend To Government

Marco Green
February 18, 2019

Das also said that the RBI will discuss the issue of transmission of rate cut with bank chiefs on February 21.

The interim dividend will help government ease fiscal pressure and also aid it in giving the economy a boost before the crucial general elections in April-May this year. This is the second straight year that the RBI has announced an advance payment to Prime Minister Narendra Modi's government.

"Based on a limited audit review and after applying the extant economic capital framework, the Board chose to transfer an interim surplus of Rs 280 billion to the central government for the half-year ended December 31, 2018", the RBI said in its statement.

Transfer of interim surplus would help the government finance various policy initiatives that were announced during interim Budget and will help to manage its fiscal position.

Sources said the RBI has finalised its proposal for interim dividend payment, which is likely to be ₹28,000-30,000 crore for 2018-19. A new RBI governor, Shaktikanta Das, took over recently following the abrupt resignation of Urjit Patel. Last financial year, the RBI had paid an interim dividend of ₹10,000 crore. However, a committee headed by former RBI Governor Bimal Jalan is reviewing the rules governing surplus transfers. Government believes that RBI is sitting on much higher reserves than it actually needs to tide over financial emergencies that India may face. The RBI's financial year runs from July to June. Some central banks around the world (like USA and UK) keep 13% to 14% of their assets as reserve, compared to RBI's 27% and some (like Russia) more than that. That means an excess capital of Rs 4.7 lakh crore to be handed over to the government.

Other reports by Click Lancashire

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