The 584th meeting of the Central Board of Reserve of Board(RBI) under the Chairmanship of Governor Shaktikanta Das approved the transfer of Rs 57,128 crore in surplus as dividend to the Central government for the accounting year 2019-20. The board decided to maintain the Contingency Risk Buffer at 5.5%.
- RBI in 2019 had transferred a record payment of Rs 1.76 lakh crore(trillion) which included Rs 1.23 lakh crore as dividend and about Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF).
Note- As per the Union Budget 2020-21, the govt has budgeted Rs 60,000 crore as dividends from RBI and state-run banks and financial institutions
Discussion and Approvals in the Board Meeting:
i.The Board reviewed the current economic situation, continued global and domestic challenges, and the monetary, regulatory and other measures taken by the RBI to mitigate the economic impact of COVID-19 pandemic.
ii.It discussed the proposal to establish an Innovation Hub.
iii.It also discussed RBI’s various areas of operation during 2019. It approved annual report and accounts of RBI for the year 2019-20.
i.As the Jalan Committee had recommended that interim dividend must be paid to the government only in exceptional circumstances, RBI did not pay any interim dividend to the government for the year ended June 2020
ii.As on June 30,2020 the fiscal deficit of the govt reached 83.2% of the full year budget target of Rs 7.96 trillion. This is primarily due to sharp fall in revenues due to the nationwide lockdown imposed to control COVID-19.
iii.The govt has sharply raised its gross borrowing programme for the current fiscal from the budgeted Rs 7.8 trillion to Rs 12 trillion, which indicates a sharp decline in the fiscal deficit required on account of the COVID-19.
i.The financial year of RBI at present is from July-June and is to coincide with the government’s April-March fiscal starting FY22
ii.The RBI in the current year will have a 9 month financial year, ending in March.
i.RBI makes huge profit by trading its currencies and government securities.
ii.RBI set aside a portion of this earning for its operational and contingency needs and the rest is transferred to the govt in the form of dividends.
Recent Related News:
i.RBI conducted the simultaneous purchase of Government Securities (G-Secs), maturing between 2027 and 2033, and sale of 182 day and 364 day treasury bills (DTBs) under Open Market Operations (OMO) for Rs 10,000 crore each. This OMO is a part of “Operation Twist” to ease pressure evolving liquidity and market conditions.
ii.RBI has decided to extend the enhanced borrowing facility provided to the banks to meet their liquidity shortages till September 30 from till June 30, 2020.
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das