RBI Transfers Rs 50,000 Crore Surplus to Government This Year

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The RBI had transferred Rs 50,000 Crore surplus to the Indian Government which is 63 percent higher than last year. The RBI has already cut the surplus in the last financial year of 2016 – 17. The government had sought an additional Rs 13,000 Crore dividend in early 2018.
As known by all the RBI has already increased the surplus by close to Rs 20,000 crore, the prospect of meeting the fiscal deficit target, pegged at 3.3% of Gross Domestic Product (GDP) this financial year, has improved based on fiscal consolidation and budget assumptions. The RBI had slashed the surplus last year in the wake of demonetization as the Central Bank RBI’s expenditure shot up largely because of a sharp rise in provisions and the cost of printing currency notes. For this purpose the formation of Y H Malegam Committee has done. The Y H Malegam committee in 2014 suggested that the central bank RBI can transfer its entire surplus to the government, without allocating anything to its various reserve funds, for 3 years because it had adequate reserve funds.
In the financial year 2015 -16 the RBI had approved the transfer of surplus amounting to Rs 65,877 Crore to the Indian Government. In financial year 2014 – 15 the central bank RBI had paid 65, 896 crore to the Indian Government. This became as a boon to the government in covering the deficit. In the financial year 2013 -14 the total surplus transferred to the Indian Government account was Rs 52,679 Crore.
This transfer of profits to the government’s account is provided in section 47 of the RBI act, which states that after making provisions for bad and doubtful debts, depreciation in assets, contribution to staff and superannuation fund and for all matters for which provisions are to be made by or under the act or that usually provided by bankers, the balance of the profits of the bank is required to be paid to the centre. On this account the Y H Malegam Committee had stopped the transfers to internal reserves since its accounting year 2013 – 14, which is now a part of expenditure.

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