MUMBAI: The sharply lower dividend payout by the RBI to the government in FY 22 was due to higher provisions made in keeping with an expanded balance sheet, which grew 8.46% on-year, reflecting the central bank’s liquidity and forex operations during the year.
The RBI paid a dividend of just Rs 30,307.45 crore to the government in FY 22, 69.42% lower than the Rs 99,122 crore it paid in FY21. This was because transfer to the contingency fund totalled Rs 1.14 lakh crore in FY22 against Rs 20,710 crore transferred in the preceding fiscal year.
The central bank’s balance sheet increased to Rs 61.9 lakh crore in FY22 from Rs 57.07 lakh crore in the preceding fiscal, which was for nine months as the RBI changed its accounting year to April-March from July-June.
Liquidity operations included buying government bonds and absorbing excess rupees from banks through the reverse repo window. When the RBI sucks out liquidity it pays an interest to banks, which reflects in the liability side of its balance sheet.
Similarly, forex operations included buying dollar from banks to cushion the rupee which has faced the brunt of a jump in crude oil prices and FII sales on Indian stock markets.
The RBI’s income jumped to Rs 1.6 lakh crore from Rs 1.33 lakh crore mainly on account of interest it received from holding government bonds and revaluation of gold and forex reserves.
Interest from loans and advances rose to Rs 2.09 lakh crore in FY22 from Rs 1.35 lakh crore. The value of gold reserves rose to Rs 3.22 lakh crore from Rs 2.48 lakh crore.
However, expenditure rose to almost Rs 1.3 lakh crore from Rs 34146.75 crore mainly due to provisions of Rs 1.14 lakh crore as per the Bimal Jalan formula which was transferred to the contingency fund.