RBI surplus profit dips 20%, liquidity overhang blamed

The Reserve Bank of India’s transferable surplus dipped by 20 per cent to Rs 15,009 crore for the year ended June. This is the second time in a row that the central bank has reported a drop in the surplus, which is transferred to the government.

The central board, at its meeting held on Thursday, approved the transfer of surplus profit to the Centre amounting to Rs 15,009 crore for 2010-11, as against Rs 18,759 crore for the year ended June 30, 2010, RBI said in a release on Thursday. In 2009-10, the surplus had dipped by 25 per cent to Rs 18,759 crore from Rs 25,759 crore in 2008-09.

 

A senior treasury official with a large public sector bank said the low yield on international assets, bonds and deposits, in an environment marked by overhang of liquidity, had partly contributed to a drop in surplus profits. The liquidity was pumped by governments in developed nations to kickstart economic growth, after the global financial system was hit by financial crisis in 2008. As one avenue to park funds, RBI invests foreign currency reserves in bonds issued by other governments. India’s foreign exchange reserves stood at $309 billion at the end of June 24. The volatility in the value of international currencies also has a bearing on earnings of the central bank, said a treasury executive with another public sector bank.