RBI earnings on foreign currency assets up 3.9 %

RESERVE BANK OF INDIA ANNUAL REPORT 2005-06

High global short-term interest rates coupled with the rising foreign exchange reserves helped RBI sharply increase its income from foreign sources.

The rate of earnings on foreign currency assets after accounting for mark-to-market depreciation on securities increased to 3.9 per cent in the year ended June 2006 compared with 3.1 per cent in 2004-2005. The RBI's financial year is July-June.

The central bank's income from deployment of foreign currency assets and gold increased by 44.5 per cent to Rs 24,538.03 crore in 2005-2006 from Rs 16,979.47 crore in 2004-2005.

The income, however, from the domestic sources declined by 13 per cent to Rs 1,782.28 crore in 2005-06 from Rs 2,048.81 crore in 2004-05.

The decline was mainly due to reduced profits on sale of securities (from Rs.4,220.52 crore in 2004-05 to Rs.3,776.20 crore in 2005-06) and a decline in interest income on loans due to lower recourse to ways and means advances by central and state governments in the face of substantial cash balances.

The central bank of the country posted an increase of 38.3 per cent in gross income at Rs 26,320.31 crore from Rs 19,028.28 crore in 2004-05.

The central bank's total expenditure declined by 14.12 per cent to Rs 5,849.10 crore in 2005-2006 from Rs 6811.27 crore in 2004-2005.

Higher growth in the aggregate deposits led to higher payment of interest on cash reserve ratio which in turn resulted in higher interest payment by 10 per cent at Rs 1524.41 crore.

The establishment expenditure of the bank declined by 44.4 per cent to Rs 919.88 crore in 2005-2006 due to reduction in provision towards gratuity and super annuation fund.

Expenditure on security printing comprising cost of printing currency notes and cheques decreased by 28.3 per cent to Rs 1034.86 due to due to lower supply of notes.