Mumbai: Accepting the recommendation of a panel headed by its former Governor Bimal Jalan, Governor Shaktikanta Das-led Reserve Bank of India central board on Monday decided to transfer a sum of whopping Rs 1,76,051 crore to the government. "The board of central bank decided to transfer a sum of Rs 1,76,051 crore to the Government of India comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF)," the RBI said in a statement.
The committee had recommended the bank equity to be within a band of 5.5 per cent to 6.5 per cent of the balance sheet. However, the RBI board has decided to maintain it at a lower end of 5.5 per cent band to hand over Rs 52,637 crore excess to the government.
The receipts from the RBI will give a fillip to the government's efforts to boost the economy from a five-year low. Finance Minister Nirmala Sitharaman had last week announced a slew of measures to prop up growth even as the government tried to stick to the target of keeping fiscal deficit at 3.3 per cent of the GDP. The additional cash will now give the Centre more headroom for stimulating the economy.
The Modi government and the RBI under its previous governor Urjit Patel had been at loggerheads over the optimum level of surplus capital with the central bank.
As a result, the RBI in its crucial November 2018 board meeting decided to form a committee to review the Economic Capital Framework (ECF) for the Reserve Bank.
However, Patel quit before the committee could be formed. Subsequently, the panel was constituted in consultation with new RBI Governor Shaktikanta Das on December 26.
Since 2013-14, the RBI has been paying 99 per cent of its disposable income to the government, which is battling to rein in deficits.
As far as the dividend is concerned, the statement said "as financial resilience was within the desired range, the entire net income of Rs 1,23,414 crore for the year 2018-19, of which an amount of Rs 28,000 crore has already been paid as interim dividend, will be transferred to the Government of India (in March 2019)".
The government will get a higher dividend Rs 95,414 crore during the current fiscal as against the estimate of Rs 90,000 crore.
The Union Budget 2019-20 had pegged dividend or surplus of the RBI, nationalised banks and financial institutions at Rs 1.06 lakh crore up from Rs 74,140.37 crore realised in the previous fiscal.
In 2017-18, Rs 40,659 crore was transferred in dividend to the government.