The Reserve Bank of India (RBI) approves transferring Rs.99,122 crore as surplus to the exchequer to help the government overcome the second wave of the COVID-19 pandemic by channelising more resources. This decision of RBI to transfer Rs.99,122 as surplus is for the accounting period of nine months ended 31 March 2021.
The RBI took this decision during the 589th meeting of the Central Board of Directors of the RBI held under the RBI Governor, Shaktikanta Das, on Friday through video conferencing. In the meeting, the RBI also decided to maintain the Contingency Risk Buffer at 5.50%. The RBI approved the transfer of Rs.99,122 crore as surplus for the accounting period of nine months, i.e. July 2020-March 2021, to the Central Government. The surplus is commonly known as ‘dividend’.
The RBI has followed the financial year of July-June since 1940. It changed the accounting year to April-March from July-June. During the meeting, the Board discussed the working of the RBI during the transition period of nine months, i.e. July 2020 to March 2021. It also approved the accounts and annual report of the RBI for the transition period.
The RBI decided to maintain a 5.50% Contingency Risk Buffer as per the recommendations of the Bimal Jalan Committee report. The report had recommended a Contingency Risk Buffer range of 6.5% to 5.5% for the RBI.
The RBI also reviewed the global and domestic challenges, current economic situation and recent policy measures undertaken by the RBI for mitigating the adverse effect on the economy due to the current second wave of COVID-19 in India.
In the Budget 2021-22, the government fixed the surplus/dividend of the RBI, nationalised banks and the financial institutions at Rs.53,510.61 crore. For the fiscal year 2020-2021, the surplus was revised downwards to Rs.61,826.29 crore as against the estimate of Rs.89,648.51 crore.
The RBI had transferred Rs.57,128 crore, only 44% of its surplus, to the Central Government as surplus for the accounting year 2019-2020. The RBI had transferred Rs.1.76 lakh crore, which included Rs.1.23 lakh crore as dividend and Rs.52,637 crore excess provision identified in the revised Economic Capital Framework (ECF) for the accounting year 2018-2019.
The four deputy governors of the RBI, Mahesh Kumar Jain, M.Rajeshwar Rao, Michael Debabrata Patra and T.Rabi Sankar, attended the 589th meeting of the Central Board of Directors of the RBI. The directors of the RBI, Satish K.Marathe, Chandrasekaran, S.Gurumurthy, Sachin Chaturvedi and Revathy Iyer, also attended the meeting. Ajay Seth, Secretary, Department of Economic Affairs and Debasish Panda, Secretary, Department of Financial Services, were present.
The RBI, being the Central Bank of India, pays a dividend from its profit or surplus every year to the Central Government to help with finances. The transfer of Rs.99,122 crore as a surplus will help the government combat the current second wave of the COVID-19 pandemic.
The COVID-19 daily infections and deaths are rising continuously, and the lockdown imposed in various parts of the country has affected the country’s economic recovery. The transfer of Rs.99,122 crore will also help the government to overcome the losses in indirect tax revenues anticipated in May-June 2021.
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