May 22nd 2024.
Mumbai: In a significant move, the Reserve Bank has approved its highest-ever dividend payout of Rs 2.11 lakh crore to the central government for the fiscal year 2023-24. This decision was made during the 608th meeting of the Central Board of Directors of the RBI, chaired by Governor Shaktikanta Das. The surplus transfer of Rs 87,416 crore for the current fiscal year is a considerable increase from the previous high of Rs 1.76 lakh crore in 2018-19. This move is expected to aid in better management of the fiscal deficit, which the government aims to contain at Rs 17.34 lakh crore for the current financial year.
The Board also discussed the global and domestic economic scenario, taking into account potential risks to the growth outlook. Additionally, they reviewed the working of the Reserve Bank during the previous fiscal year and approved its Annual Report and Financial Statements. In light of the prevailing macroeconomic conditions and the impact of the Covid-19 pandemic, the Board had previously decided to maintain the Contingent Risk Buffer (CRB) at 5.50 per cent of the RBI's balance sheet size to support growth and overall economic activity. However, with the revival of economic growth in FY 2022-23, the CRB was increased to 6.00 per cent. As the economy continues to remain robust and resilient, the Board has now decided to further increase the CRB to 6.50 per cent for FY 2023-24.
The RBI has arrived at the transferable surplus for 2023-24 based on the Economic Capital Framework adopted in August 2019, as per the recommendations of the Bimal Jalan-headed expert committee. This committee had suggested maintaining the risk provisioning under the CRB within a range of 6.5 to 5.5 per cent of the RBI's balance sheet. The central bank stated that the surplus transfer is in line with this framework.
Looking ahead, the central government has projected a dividend income of Rs 1.02 lakh crore from the RBI and public sector financial institutions in the Budget for 2024-25. This further highlights the importance of this high dividend payout to the government's fiscal management. The RBI's decision to increase the CRB also reflects the confidence in the country's economic growth and its ability to withstand any potential risks.
In conclusion, the Reserve Bank's approval of the highest-ever dividend payout to the central government is a significant development that will aid in managing the fiscal deficit and support economic growth. With the increase in the CRB, the RBI has shown its trust in the country's resilience and robustness. This decision is in line with the recommendations of the expert committee and highlights the responsible and strategic financial management of the central bank.
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