RBI payout to government falls to Rs 30,000 crore in FY22
Apex bank had paid Rs 99,000 cr for 9 months in FY21; govt was expecting Rs 73,948 cr from RBI and other PSBs in FY23
NEW DELHI: The Reserve Bank of India (RBI) on Thursday approved Rs 30,307 crore as dividend for the financial year 2021-2022 to the government, which is significantly lower than last year’s payout. The apex bank had paid Rs 99,122 crore as dividend for nine months in FY21. The 596th meeting of the apex bank’s board was chaired by its Governor Shaktikanta Das.
Notably, in 2020, the central bank had switched to April-March accounting year from July to June, in a bid to align with the government’s financial year. Considering this also, the FY 21 dividend was much higher as against the dividend for FY22, which is for a period of twelve months.
The RBI is likely to release its annual report in the month-end with all the details related to dividend, etc. Dividend from the apex bank is one of the main sources of income for the government. It is already fighting with the record-high inflation. The significant drop in dividend from the central bank is another setback for the government.
According to the Budget 2022 announcements, the government was expecting to receive Rs 73,948 crore from RBI and other public sector banks(PSBs) in FY23. The lower payout to the Centre could be on account of an increase in the reverse repo rate in FY22 to control the money supply.
The reverse repo rate is the interest rate at which the central bank borrows from commercial banks to suck out excess liquidity from the economy. When the Covid pandemic had hit the country in FY20, the Reserve Bank of India had infused a huge amount of liquidity into the system by reducing policy repo rates
in two phases by 115 basis points.
In FY22, when the pandemic came under control and the economy opened up, the RBI increased the reverse repo rate to decrease the money supply. Besides this, the banking sector regulator also decided to keep a 5.5% contingency risk buffer.