Reserve Bank of India to pay dividend of Rs 500 bn to Centre for FY18

The Reserve Bank of India on Wednesday said it has decided to pay a dividend of Rs 500 billion to the Union government for the year ending June 30, 2018.

The decision was taken at its board meeting held.

"The Central Board of Directors of the Reserve Bank of India, at its meeting held on August 8, 2018, approved the transfer of surplus amounting to Rs 500 billion for the year ended June 30, 2018, to the Government of India," the central bank said in a statement.

The RBI follows July-June financial year.

Earlier in March, the RBI paid interim dividend of Rs 100 billion at the insistence of the government to support fiscal position.

As per the Budget Estimate, the government projected to collect Rs 548.17 billion as dividend or Surplus of Reserve Bank of India, Nationalised Banks and Financial Institutions. The government realised Rs 516.23 billion under this head in the previous fiscal.

It is to be noted that the RBI had last year transferred a surplus of Rs 306.59 billion as the dividend to the government for the year ended June 30, 2017, which was less than half of what it paid in the previous year (Rs 658.76 billion).

The surplus payout in June 2017 year was low on account of expenses incurred on the printing of new currency notes following demonetisation effected on November 9, 2016.

Under the RBI Act, 1934, the central bank is required to pay the government its surplus after making provisions for bad and doubtful debts, depreciation in assets and, contribution to staff and superannuation fund among others.