RBI approves `57K payout for Centre

Dividend in tune with Budget estimate of `60K cr

New Delhi: The Reserve Bank of India on Friday approved an annual dividend payout of more than 57,000 crore to the government. The development comes at a time when the government’s fiscal deficit hit a record `6.62 lakh crore in the April-June period. ■

The central board of the Reserve Bank of India (RBI) on Friday approved a dividend transfer of Rs 57,128 crore to the central government for the accounting year 2019-20.

The board has also decided to maintain the contingency risk buffer at 5.5 per cent as mandated by the Bimal Jalan Committee.

The transfer of 2019-20 is sharply lower than last year’s. Last August, the central bank had announced the highest ever dividend transfer of Rs 1.76 lakh crore to the government. The dividend then comprised Rs 1.23 lakh crore of annual dividend for the year 2018-19 and Rs 52,637 crore from its surplus capital identified by a revised economic capital framework.

The Jalan panel had also recommended that the interim dividend should be paid only under exceptional circumstances. The high-level panel, under the leadership of former RBI governor Bimal Jalan, was formed to recommend ways to utilise RBI’s excess cash reserves.

The RBI usually transfers surplus to the government in August after closing its books in June. RBI and the government follow different fiscal years. RBI is in the process of aligning its fiscal year with the government’s from April 1, 2021. The RBI earns its profits primarily from the interest it gets from the purchase and sale of government securities, the interest earned from lending to banks and interest earned on bond holdings. The dividend was lower this year as the RBI earned less from bond holdings and did not have one-time gains to transfer as it did in the previous year.

The transfer while lower than last year is in line with the amount that the government had budgeted for. The Union government had pegged Rs 60,000 crore as dividend from RBI in the Union Budget 2020-21. The government had budgeted a fiscal deficit at Rs 7.96 lakh crore for FY21. The fiscal deficit stood at 83.2 per cent of the FY21 budget target.