RBI annual report: Provision figure confounds analysts

Demonetisation led to loss to RBI that had to give interest to banks against excess money deposited

A sharp rise in the Reserve Bank of India’s (RBI’s) provision figures for the financial year 2016-17 has elicited keen interest from analysts.
 

The central bank revealed on Wednesday that it had done a provision of Rs 13,140 crore for FY17, against Rs 1,000 crore the previous year. Of this provision, Rs 6,585 crore was charged to the contingency fund on account of notional losses on forward contracts (Rs 2,963 crore) and for the Investment Revaluation Account-Foreign Securities (Rs 3,622 crore). However, for the balance Rs 6,555 crore, the central bank has given no explanation.

The first two charges can