RBI dividend for the Center decreased by 70% in fiscal year 22

MUMBAI: The Board of Directors of the Reserve Bank of India on Friday approved a dividend of Rs 30,307 crore to the government for the period 2021-22, marking a drop of almost 70% from last year’s Rs 99,122 .
Lower dividends result from lower performance from canceling government stock investments LIC. Over the past few years, RBIThe large surplus transfers helped the government meet its higher spending requirements. While the Center will see spending commitments increase in the current financial year as subsidies are forecast to increase, it will have to depend on tax revenues to close the gap.
There are many factors causing the surplus to shrink this year. A major cost to RBI is the interest paid to banks on the money they use it on a liquidity adjusted basis. The central bank has paid out thousands of dong to banks after accumulating surplus liquidity that they pumped into banks in the wake of the Covid pandemic.
The RBI has also been hit by its foreign investment as the value of debt securities has fallen due to rising interest rates. It has also had to spend more than $40 billion of its reserves to hedge against market volatility and will need to set aside more money to replenish its reserves.
“The Board of Directors approved the transfer of the surplus Rs 30,307 crore to the central government for the fiscal year 2021-22 while deciding to maintain the contingency risk buffer at 5.50%,” RBI said. said in a statement.
“For the year, the government is targeting around Rs 74,000 crore as dividends from RBI, public sector banks and other financial institutions. This means that a large portion of the profits of PSBs and FIs will have to be carried over to do well on this number, otherwise there will be slippage.” Madan Sabnavischief economist, Bank of Baroda.
Last year’s dividend of Rs 99,122 crore was higher than expected in just 9 months (July 2020 to March 2021). From fiscal year 21, the government decided to align the accounting year of the RBI with the fiscal year of the government. Previously, RBI had an accounting year from July to June.
The RBI, in its statement, said the board also considered the current economic situation, global and domestic challenges, and the impact of recent geopolitical developments. “The Board of Directors also discussed RBI’s performance for the period April 2021 to March 2022 and approved the annual report and accounts for the 2021-22 fiscal year,” the statement said. said.
Bankers do not rule out another interim dividend. “RBI earnings increase during volatile market times. Dollars sold by the central bank in the current financial year, when the rupee breached 77 levels, would give it a big profit,” Treasury Start with a private bank.

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