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RBI rejects govt’s demand for giving additional dividend worth Rs 13K cr under transfer of surplus norm: Report

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(G.N.S) Dt. 25

New Delhi

The Reserve Bank of India (RBI) on Thursday turned down government’s demand for giving it an additional dividend of Rs 13,000 crore, according to this a TV channel report. The central bank undertakes a July-June financial year model and finalises its account book every year in June when it declares dividend for the central government. In August 2017, the RBI had reduced by 50 percent the dividend it doles out to the government.

In November last year the government had raised the demand before the RBI to grant it an additional dividend of Rs 13,000 crore as it was working on details of plan to fund ailing public sector banks.

For the July-June 2017 fiscal year, the RBI transferred merely Rs 30,659 crore to the government which was more than half of Rs 65,876 crore, the amount that the central bank gave to the government in July-June 2016 fiscal year, according to this media report.

The fall in RBI’s dividend to the government was widely attributed to the increased cost of printing new Rs 2,000 and Rs 500 currency notes, an exercise necessitated on account of demonetisation on 8 November, 2016. However, the central bank had not given any specific reason as to why it cut the dividend.

“The Reserve Banks Central Board at its meeting held today approved the transfer of surplus to the Government of India amounting to Rs 306.59 billion (Rs 30,659 crore) for the year ended 30 June, 2017,” the central bank had said on 10 August, 2017, the media report mentioned.

It had also said the government wanted Rs 58,000 crore in dividend from the RBI in 2017-18. As per the budget estimate, the government had pegged Rs 74,901.25 crore as dividend from the RBI, nationalised banks and financial institutions for the current fiscal.

It was also reported that the decline in annual dividend from the RBI could weigh on government’s fiscal math and might also disturb the calculation about fiscal deficit target which presently set at 3.2 percent of GDP.

However, back then the report had said: According to India Ratings & Research Chief Economist D K Pant, the significant decline in dividend is due to reverse repo transactions, printing of notes and appreciation in rupees value against the US dollar.

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