The Reserve Bank of India (RBI) on Monday decided to offer an interim dividend of Rs 28,000 crore to the Centre, driving up its total transfer in the current fiscal to Rs 68,000 crore, as estimated by the interim Budget. The highest surplus transfer by the central bank in at least a decade would help a poll-bound government contain its FY19 fiscal deficit at 3.4% of GDP (against the targeted 3.3%), at a time when goods and services tax revenues are expected to trail the budgeted goal by as much as Rs 1 lakh crore. Dividend was one of the vexed issues in the much-hyped tussle between the finance ministry and former RBI governor Urjit Patel, during whose tenure the RBI\u2019s surplus transfer (as % of its \u2018net disposable income\u2019) dropped to under 80%, against 100% during Raghuram Rajan\u2019s period. The elevated transfer now under new governor Shaktikanta Das seems like a departure from the RBI\u2019s policy during the Patel era. Last fiscal, the RBI had transferred `40,659 crore (including an interim dividend of Rs 10,000 crore in March 2018). The government has already received `40,000 crore from the RBI this fiscal. The latest interim dividend will be from the central bank\u2019s expected surplus in its 2018-19 financial year (July 2018-June 2019). \u201cBased on a limited audit review and after applying the extant economic capital framework (ECF), the board decided to transfer an interim surplus of `280 billion (`28,000 crore) to the central government for the half-year ended December 31, 2018,\u201d the RBI said in a statement after a meeting of its central board on Monday. \u201cThis is the second successive year that the RBI will be transferring an interim surplus.\u201d After his customary post-Budget meeting with the central bank board, finance minister Arun Jaitley said India needed fewer and larger lenders to achieve the economies of scale, amid speculation that more mergers may be in the offing in the public sector banking space after the amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda. The minister also allayed fears of fiscal balance tripping in FY20 due to the introduction of new schemes like PM-Kisan in the interim Budget, saying whatever is announced is adequately budgeted for. Speaking on the occasion, RBI governor Das refused to introduce new (and easier) prompt corrective action (PCA) framework for public sector banks merely because they have sovereign backing. \u201cThe regulator doesn't differentiate between the government-owned and private entities because both of them are in the same market and competing with each other. Therefore, you have to treat both equally,\u201d Das said. Amid complaints that banks are not transmitting the benefit of the central bank\u2019s cut in the benchmark lending rate to borrowers as they should, Das said he would meet chiefs of public and private sector banks on February 21 to discuss this issue. "Transmission of rates is very important especially after central bank announces a rate cut. It's already stated in our post-MPC conference," he said. Earlier this month, the monetary policy committee trimmed the benchmark interest rate by 25 basis points to 6.25%. However, only a handful of banks, including SBI, have cut their rates, that too by just five basis points. Also read: Punjab budget gives fuel relief! Petrol prices cut by Rs 5, diesel down by Re 1 Commenting on credit offtake, Das said: \u201cThe aggregate flow of finance and credit to the commercial sector has shown some improvement but it is not broad-based. It is not flowing in various sectors the way it should be,\u201d he said. Listing out benefits of consolidation in banking, Jaitley said: \u201cIndia needs fewer and mega banks which are strong because in every sense \u2014 from borrowing rates to optimum utilisation \u2014 the economies of scale in banking are of great help.\u201d The government approved merger of SBI with five of its arms and Bharatiya Mahila Bank in 2017. Earlier this fiscal, it cleared the amalgamation of Bank of Baroda, Dena Bank and Vijaya Bank. Sources had earlier told FE that the government was weighing the next phase of consolidation by amalgamating Punjab National Bank, Oriental Bank of Commerce and Punjab & Sind Bank, as and when it thought fit.