In a much-needed breather for the government, Reserve Bank of India (RBI) has agreed to pay an extra dividend to the government, agencies reported.
In a much-needed breather for the government, Reserve Bank of India (RBI) has agreed to pay an extra dividend to the government, agencies reported. The central government had sought Rs 13,000 crore additional dividend from the central bank. In August, the RBI had paid a dividend of Rs 30,659 crore for the fiscal ended June 2017 which was less than half the Rs 65,876 crore it had paid in 2015-16. The government had budgeted for a Rs 58,000 crore dividend from the RBI in its Budget for this fiscal year. RBI’s profit was about Rs 44,000 crore, of which Rs 30,000 crore has been distributed and Rs 13,000 crore it retained towards risks and reserves. So the government has made a suggestion that the Rs 13,000 crore may also be transferred, he said.
Economic Affairs Secretary Subhash Chandra Garg had then said that the government is only seeking Rs 13,000 crore of surplus lying with the Reserve Bank. He said that the government has not asked the central bank to pay any special dividend. “There is no proposal at this stage to ask for any special dividend. What is being discussed is to only ask for what the RBI earned this year but did not distribute. That is about Rs 13,000 crore. That’s what the government has suggested the Reserve Bank to transfer,” Garg told PTI. The government had last month announced an unprecedented Rs 2.11 lakh crore capital infusion in PSU banks, which are grappling with high non-performing assets (NPAs). Asked about the contours of the recap bonds, Garg said “the recapitalisation package is in the final stages. The Department of Financial Services is working on it and soon we would see all these aspects being addressed”.
Of the Rs 2.11 lakh crore, Rs 1.35 lakh crore would be infused through recapitalisation bonds and the remaining Rs 76,000 crore through budgetary support and banks diluting equity in capital market.The RBI’s main source of income is interest earned on bond holdings through open market operations or purchase and sale of government securities. Following the recommendations of the Malegam committee, the RBI stopped transfers to internal reserves since its accounting year 2013-14 which is now a part of expenditure.