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RBI approves Rs 87,416-crore surplus transfer to govt for 2022-23

The Union Budget for this year estimated the surplus from the central bank, public sector banks, and financial institutions at Rs 48,000 crore

Reserve Bank of India, RBI

The surge in surplus is due to higher income during FY23 which was boosted by sale of foreign exchange reserves

Manojit Saha Mumbai

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The board of the Reserve Bank of India on Friday approved Rs 87,416 crore of surplus transfer to the government for 2022-23 and said it maintained the contingency risk buffer 50 basis points higher at 6 per cent for the year.

The surplus is almost three times the amount in 2021-22 (Rs 30,307 crore), though the figures are not exactly comparable as 2021-22 was a nine-month accounting year for the RBI. The Indian central bank shifted its accounting year (AY) from July-June to April-March last year, in sync with the government’s fiscal year.

In AY22, the contingency buffer was kept at 5.5 per cent; provision towards the contingency fund was around Rs 1.15 trillion. The surge in surplus is due to higher income during AY23, boosted by selling of foreign exchange reserves.

“The board in its meeting reviewed the global and domestic economic situation and associated challenges, including the impact of current global geopolitical developments,” the central bank said in a statement.

“The board also discussed the working of the Reserve Bank during the year April 2022-March 2023 and approved the Annual Report and accounts of the Reserve Bank for the accounting year 2022-23. The board approved the transfer of ₹87,416 crore as surplus to the central government for the accounting year 2022-23, while deciding to keep the contingency risk buffer at 6 per cent,” the statement added.

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Economists said the higher surplus transfer was mainly due to sale of foreign exchange reserves. However, since the RBI has a large investment in US treasuries, a sharp rise in yields have dented profits.

“Gains from record gross foreign exchange sales in 2022-23 would be the major driver of bumper surplus, albeit with the profit being partly offset by higher provisioning on MTM (mark-to-market) losses on foreign securities. Besides, the higher contingency buffer at 6 per cent of balance sheet versus 5.5 per cent in the past, also ate into the profit,” said Madhavi Arora, lead economist, Emkay Global.

Emkay estimated around $206-million sales by the RBI untik February 2023. The sales were mostly in the June-December period when the rupee was on average around 80.6 versus $ as compared to its historical acquisition price of 64/65 to a dollar.

“The dividend could bring in additional revenue of around 0.2 per cent of GDP, which could partly offset possible losses amid lower tax revenues, divestment, etc,” Arora said, adding the surplus was in line with the expectations.

The Union Budget for this year estimated the surplus from the central bank, public sector banks, and financial institutions at Rs 48,000 crore.

Apart from the RBI Governor and the four deputy governors, other directors of the central board, including Satish Marathe, Revathy Iyer, Sachin Chaturvedi, Anand Mahindra, Pankaj Patel and Ravindra Dholakia, attended the meeting. Ajay Seth, secretary, Department of Economic Affairs, also attended the meeting, the RBI statement said.

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First Published: May 19 2023 | 6:43 PM IST

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