After nearly 8 decades, RBI to change its accounting year to April-March

Breaking away with nearly eight decades of practice, the Reserve Bank of India (RBI) on Monday decided to follow April-March calendar, and not July-June calendar, as its accounting year, a top central bank official said. It was done to align its accounting year with that of the central government.

The decision was taken during the RBI’s central board of directors’ meeting on Monday. This will, in effect, do away with the RBI’s need to transfer an interim dividend to the central government — a practice which has been adopted in the past few years after the National Democratic Alliance (NDA) assumed power in 2014.

The RBI, which currently follows July-June calendar, usually transfers dividend after closing its accounts in August. On Monday, the RBI decided to transfer Rs 1.76 trillion to the central government after finalising its account in the meeting of its central board.

The central government, which follows the April-March calendar, had been demanding an interim dividend from the central bank in a bid to rein in its fiscal deficit after presenting its accounts to the public in February.

“By following the same financial year as the government, there will be no need for transfer of an interim dividend,” the central bank official said.

The RBI, which was established in April 1935, used to follow January-December as its accounting year before it was changed to July-June in March 1940.

Earlier at its board meeting in February, the RBI had decided to transfer an interim dividend of Rs 28,000 crore to the government (fiscal year 2017-18 for the central government and 2018-19 for the RBI). The interim dividend transfer was based on a “limit audit review” of the central bank’s balance sheet for the half-year ended December 31, 2018. At that time, the RBI had decided to conduct a statutory audit of its half-yearly accounts to arrive at the interim dividend sum as a practice going ahead.

The RBI had, for the first time, transferred an interim dividend of Rs 10,000 crore to the Union government in 2017-18 on the latter’s request.