The Reserve Bank of India on Friday said it will transfer a surplus of Rs 99,122 crore to the central government for the nine-month accounting period that ended March 31. The decision was taken at a meeting of the Central Board of Directors of the RBI, chaired by Governor Shaktikanta Das.
As the manager of its finances, every year the central bank pays a dividend to the government to help with the finances from its surplus or profit.
The surplus is usually given based on the RBI’s operations over a one-year period. However, last year the RBI changed its accounting year to an April-March schedule, from the earlier period of July-June. Therefore, the central bank has decided to transfer the surplus for the nine-month period of June 2020 to March 2021.
The surplus was decided on while holding the contingency risk buffer at 5.5%, the RBI said. In 2019, the central bank had also adopted a new framework under which it is required to maintain a contingency risk buffer of 5.5-6.5% of its balance sheet. For this year, the RBI had chosen to maintain the lowest required buffer.
The surplus transfer amount is the second highest ever in any financial year. In the 2018-’19 fiscal year, the RBI had transferred nearly Rs 1.76 lakh crore. In the last financial year, the central bank transferred Rs 57,128 crore.
While presenting the Union Budget in February, Finance Minister Nirmala Sitharaman had projected Rs 53,511 crore as surplus transfer from the RBI. The actual amount, which is over 85% higher than the Budget estimate, is expected to help the central government with its expenses as the country battles the second wave of the coronavirus pandemic.
“The amount of surplus to be transferred by the RBI to the government of India is considerably higher than the budgeted level,” Aditi Nayar, Chief Economist at credit rating agency ICRA, told BloombergQuint. “This will offer a buffer to absorb the losses in indirect tax revenues that are anticipated in May-June 2021, related to the impact of the now widespread state lockdowns on the level of consumption on discretionary items and contact-intensive services.”