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RBI to pay ₹99,122 cr. surplus to Centre
Why is it in news?
- The Reserve Bank of India’s board approved surplus transfer to the government.
Details:
- The RBI announced a surplus transfer of ₹99,122 crore for the 9-month period from July 2020 to March 2021.
- This is the highest ever transfer by the RBI in an accounting period. In FY19, ₹76 lakh crore was transferred to the government.
- In the previous full accounting year, the RBI had transferred ₹57,128 crore as surplus.
- The surplus approval comes as the government is expecting a sharp sequential fall in tax collections due to the second wave of COVID-19.
- The surplus distribution policy of the RBI is determined in accordance with Section 47 of the RBI Act, 1934.
RBI's Balance Sheet:
- RBI's balance sheet includes reserves comprising assets and earnings, which offers a cushion in times of an economic crisis.
- Most of these reserves are maintained through gold reserves and foreign exchange assets.
- The 'Surplus funds' is the amount RBI transfers to the government after meeting its own expenses.
- This surplus is basically RBI's income which it earns through bank’s open market operations (interest on securities it holds).
- RBI also transfers a portion of its earnings into the Contingency Fund (CF).
Source: The Hindu.