The Bimal Jalan-led committee, whose report was put out by the Reserve Bank of India (RBI) on Tuesday, has recommended that the central bank move its accounting year to April-March from the present July-June from fiscal year 2020-21. It has also advised the RBI to give out interim dividend only in “extraordinary” situations.
The central board of the RBI, which met on Monday, has accepted this recommendation, according to an official.
“Historically, the July-June year would have been linked to the agricultural seasons which is not a consideration in these times,” the Jalan committee reviewing RBI’s economic capital framework noted in its report.
It said the RBI would be able to provide better estimates of the projected surplus transfers to the government in a financial year for budgeting purposes.
“It could reduce the need for interim dividend being paid by the RBI. The payment of interim dividend may then be restricted to extraordinary circumstances,” the committee said.
The RBI has been following July-June as its accounting year since March 1940, as against April-March cycle followed by the central government and other corporate entities in India.
“It (change in accounting year) would obviate any timing considerations that may enter into the selection of OMO/ MSS as monetary policy tools. It would also bring about better cohesiveness in monetary policy projections, reports published by the RBI, many of which are using the fiscal year as the base.
OMO is open-marketing operations and MSS is market-stabilisation scheme.
The practice of paying interim dividend by the RBI to the central government commenced in 2016–17. The RBI had then transferred Rs 10,000 crore to the Union government.
Earlier at its board meeting in February, the RBI had decided to transfer an interim dividend of Rs 28,000 crore to the government (fiscal year 2017-18 for the central government and 2018-19 for the RBI).
The RBI, which currently follows July-June calendar, usually transfers dividend after closing its accounts in August.
On Monday, the RBI decided to transfer Rs 1.76 trillion to the central government after finalising its account in the meeting of its central board.