Government gets Rs 2.11 lakh crore from RBI by way of dividend
RBI has transferred a record surplus of Rs 2.1 lakh crore to the central government for FY’2023=24 on account of windfall interest income from investment in overseas securities and income from LAF operations. .
The huge windfall for the government puts in a much stronger fiscal position and opens up the possibility of a cut in borrowing. Banking system liquidity is also set to get a boost once the government resumes spending after the elections
The windfall dividend is well above the Rs 1.05 lakh crore estimated in the the Interim Budget for FY2025 under dividends and profits, which also includes dividends from public sector banks and other undertakings.
he surplus amount was arrived at on the basis of the Economic Capital Framework (ECF) adopted by the Reserve Bank on August 26, 2019 as per recommendations of the Expert Committee to Review the Economic Capital Framework chaired by former governor Bimal Jalan. The committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5 to 5.5 per cent of the RBI’s balance sheet. “ As the economy remains robust and resilient, the Board has decided to increase the CRB to 6.50 per cent for FY 2023-24” the Reserve Bank said in a release.
RBI’s Economic Capital (or risk buffers) in FY24, is tracking at 25.5% of total assets as of March 29th, 2024 according to estimates by IDFc First Bank, which is higher than the recommended range of 20.8%-25.4%
RBI approves dividend of Rs 2.11 lakh crore to
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