New Delhi, August 11: Implying lesser non-tax revenues to the government this year, the Reserve Bank of India (RBI) on Thursday approved the transfer of surplus amounts of only Rs 30,659 crore to the government for the year ended June 2017. The amount this year that will be transferred to the government this year is less than half the amount of Rs 65,876 crore it transferred to last year. Last year the huge amount helped the government in covering the deficit but this year the scenario is totally different.
On Thursday, the RBI Board held its meeting and approved the transfer of surplus to the government for the year ended June 30, 2017. As per reports by Economic Times, the dip in the transfer of surplus this year may be because of various factors including higher cost of printing new currency notes and cost of managing excess liquidity faced by phasing out of Rs 500 and Rs 1000 notes. The transfer of surplus to the government is provided in Section 47 of the RBI Act. Reports state that after following the recommendations of the Malegam committee, the RBI stopped transfers to internal reserves since its accounting year 2013-14 which is now a part of expenditure.
As per Malegam panel report, the Reserve Bank of India transfers the balance of its profits to the Central Government as per Section 47 of the RBI Act, 1934. This takes place after making provisions for bad and doubtful debts, depreciation in assets, contribution to staff and superannuation fund and for all matters for which provision is to be made by or under the Act or which are usually provided by bankers.
The main chunk of income for the Reserve Bank of India comes from its foreign assets and domestic assets. Also, its income is interest earned on bond holdings through open market operations or purchase and sale of government securities. The RBI follows a July-June accounting year and has been transferring its entire surplus to the government as a dividend since 2014, following global best practices followed by central banks. A report by Economic Times states that a bulk of the income for the central bank is interest income, of which nearly 60 per cent is interest earned on domestic bond holdings.
On Thursday, RBI fixed the reference rate of the rupee at 63.9437 against the US dollar and 75.0635 for the euro. The corresponding rates were 63.7491 and 74.8606, as on Aug 09, 2017. As per RBI statement, the exchange rates for the pound and the yen against the rupee were 83.0053 and 58.15 per 100 yens, respectively, based on reference rates for the dollar and cross-currency quotes at noon.