The Reserve Bank of India (RBI) will transfer Rs 30,307 crore as surplus to the government for 2021-22, the central bank said in a statement following its board meeting on Friday. The decision was taken after deciding to maintain the contingency risk buffer at 5.50 per cent of its balance sheet.
According to the Bimal Jalan committee’s report, the RBI, at all times, has to maintain a minimum contingency risk buffer of 5.5 per cent.
This year’s transfer is sharply lower than what the central bank had did in the previous financial year — Rs 99,126 crore.
The central bank had infused huge liquidity into the system in the last two years of Covid to spur growth. There was excess liquidity of Rs 7 trillion in the banking system on lacklustre credit offtake. Banks parked their excess liquidity with the RBI and on that they get interest, which in turn dented the central bank’s profitability.
“The Board also discussed the working of the Reserve Bank during the year April 2021–March 2022 and approved the Annual Report and accounts of the Reserve Bank for the year 2021-22. The Board approved the transfer of Rs 30,307 crore as surplus to the Centre for the year 2021-22, while deciding to maintain the Contingency Risk Buffer at 5.50%,” the RBI statement said.
Last year, the transfer of Rs 99,126 crore was for a nine-month period ended March 2021.
“For the year, the government is targeting Rs 74,000 crore approximately as dividend/surplus from the RBI, public sector banks (PSBs) and other public financial institutions (FIs). This will mean that a large part of the profit of PSBs and FIs will have to be transferred to make good this number or else there will be a slippage,” said Madan Sabnavis, chief economist, Bank of Baroda.
“In FY22 due to heavy investment by the RBI in reverse repo auctions, which at an average of Rs 6-7 trillion a day at an average cost of even 3.5 per cent, would mean a cost of Rs 21,000-24,500 crore. This would have accrued to the government as the surplus would have been higher,” Sabnavis added.
Recently, the government raised over Rs 20,500 crore from the public listing of Life Insurance Corporation.
“The amount of surplus appears to be modestly lower than the budgeted amount. However, the tax receipts are expected to substantially surpass the budgeted level, absorbing the impact of the former,” said Aditi Nayar, chief economist, ICRA.
The central board of the RBI reviewed the economic situation, global and domestic challenges, and the impact of recent geopolitical developments, in the meeting.