Interim relief for RBI

This refers to Somesh Jha’s report “RBI to conduct its first half-yearly audit” (February 6). Last year, the Reserve Bank of India (RBI) had succumbed to the Centre’s pressure to pay a ‘token interim dividend’ of ~10, 000 crore before the close of FY 18, overlooking the provisions of RBI Act, 1934. Section 47 of the Act says that “after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 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". Earlier, respecting the statute book, the government of India (GOI) was receiving surplus income of the RBI only after approval of the respective year’s accounts by the central bank. In the fitness of things, pending amendment to the relevant section, the GOI could have resisted the temptation to register a win over the RBI, as the amount it was receiving as advance payment was not substantial in the context of the fiscal deficit.

The present move to arrive at the amount of interim dividend based on the audited accounts of the RBI for the half year ending December 31, 2018, should give the RBI some relief while making the advance payment for which there is no provision in the Act. Perhaps, the RBI or the GOI may consider regularising the position by incorporating an enabling provision in Section 47 of the RBI Act, 1934.

M G Warrier Mumbai