RBI sets aside more money for rainy days, payouts drop

MumbaiThe Reserve Bank of India’s spending rose as it pooled more money towards a contingency fund, shows an annual report, cut the central bank’s surplus and cut the government’s surplus in a decade, a development economist said. Small dividend paid.

While income grew 20.1% in the fiscal year to March 2022, expenditure grew by more than 280%, according to the report published on Friday, with provisions of Rs 1.15 trillion ($14.8 billion) set aside and contingency funds. was transferred to. The annual report showed that this was almost six times the amount set aside last year.

A contingency fund is a rainy day fund meant for unforeseen and unforeseen situations, including depreciation in the value of securities, risks arising from monetary and exchange rate policy operations conducted by the Reserve Bank of India.

The annual report showed that during the year, the central bank’s revaluation of foreign currency investments incurs a charge of Rs 942 billion, allowing it to increase its contingency fund.

The central bank approved the transfer of Rs 303.1 billion from its surplus fund to the government, a third of the Rs 991.2 billion given last year. The lower payment could further strain the fiscal position of the government which is already under pressure to cut fuel tax.

low pay |  India's central bank approves nominal payment to the government

Anubhuti Sahay, India’s chief economist at Standard Chartered Plc, said the lower dividend payout was driven by higher provisioning to ensure adherence to the economic capital framework. Otherwise, selling in bonds globally and in India would have reduced the capital buffer, she said. The central bank has to maintain the minimum required contingency risk buffer of 5.5%.

The report said the size of the RBI’s balance sheet grew by 8.5 per cent as of March 31, 2022, mainly reflecting its liquidity and foreign exchange operations during the year. ,bloomberg


Read also: Modi government’s steps to fight inflation will help, but risk unintended consequences