Lower RBI payout to govt for higher provision

In FY22, RBI paid dividend of `30,307.45 cr to the govt, which is 69.42% lower than `99,122 cr it had paid in FY21

Published: 28th May 2022 07:38 AM  |   Last Updated: 28th May 2022 07:38 AM   |  A+A A-

RBI. (File Photo)

RBI. (File Photo)

By Ram Sahgal
Express News Service

NEW DELHI:  The sharply lower dividend payout by the Reserve Bank of India (RBI) to the government in FY22 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 liquidity operations during the year. 

In the fiscal year 2021-22, RBI paid a dividend of just Rs 30,307.45 crore to the government, which is 69.42% lower than the Rs 99,122 crore it had paid in FY21 . This was because the transfer to the contingency fund totalled Rs 1.14 lakh crore in FY22 as compared to Rs 20,710 crore 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 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 cental bank sucks out liquidity it pays an interest to banks, which reflects in the liability side of its balance sheet. 

Similarly, forex operations included buying dollars 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 in FY22 from Rs 1.33 lakh crore FY21, 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 . Gold reserves value 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 34,146.75 crore, mainly due to provisions of Rs 1.14 lakh crore as per the Bimal Jalan formula which was transferred to the contingency fund. 

RBI’s income in FY22
RBI’s income rises to Rs 1.6 lakh cr in FY22 from Rs 1.33 lakh cr in FY21, mainly on account of interest it received from holding govt bonds and revaluation of gold and forex reserves. Interest from loans and advances rose to Rs 2.09 lakh cr

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