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.
  • 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.

Posted by Jawwad Kazi on 22nd May 2021