Interim dividend issue may come up in next board meeting of RBI

The issue of interim dividend may come up for discussion in the next Reserve Bank of India (RBI) board meeting as the government struggles to meet its ambitious fiscal deficit target of 3.3% amid revenue shortfall, sources said.

Government finances have come under pressure due to moderation in revenue collection and a slew of measures taken to lift growth from over six-year-low of 4.5% in the second quarter of the current fiscal.

There would be at least one board meeting of RBI before this fiscal comes to an end, the issue of interim dividend could be raised by government nominee directors in the meeting, sources said.

According to sources, it has been an exceptional year during which several extra-ordinary measures including slashing corporate tax rate outside Budget were announced putting government finances under stress.

If the RBI board agrees to interim dividend based on their six-month performance, it would provide some financial relief to the government, sources added.

RBI follows July to June financial year. The RBI largely earns profits through its trading of currencies and government bonds. Part of these earnings are set aside by the RBI for its operational and contingency needs while the rest is transferred to the government in the form of dividend.

In the past, the government has taken the route of seeking interim dividend from the RBI to balance its account. Last fiscal, the RBI paid Rs 28,000 crore as interim dividend.

During 2017-18, the government received Rs 10,000 crore as interim dividend from the central bank.