Letter to BS: Forcing RBI to transfer pre-determined amount is unwarranted

The RBI needs to build up its reserves to deal with volatility in the markets it oversees as well as to handle the government borrowing programmes, among other things

This refers to “Let RBI decide” (July 25). I agree with your views that requiring the Reserve Bank of India (RBI) to transfer a pre-determined portion of its annual surplus as dividend to the government is unwarranted. It is a basic principle of functioning for any corporate that surplus is determined by the income which accrues minus the expenditure incurred, some of which is transferred to the reserves and the rest is paid out as dividend to the shareholders. In the RBI’s case, the government is the sole shareholder so this same principle should apply to it. The RBI needs