The Central Board of RBI has approved the transfer of surplus 99,122 crore rupees to the government.
Major decision has been taken in the Central Board meeting of the Reserve Bank of India. In the meeting, approval has been given to transfer the surplus amount of 99122 crore rupees to the government. Yes, it means that the government will get 99122 crore rupees. The surplus amount from July 2020 to March 2021 will be available to the government.
Why RBI will give money
Economists say that the main sources of RBI’s income are government bonds, investment on gold and forex and bond trading in the foreign market.
RBI had a record surplus this time because last year, the bank was active in both the gold and foreign exchange markets. The bank sold dollars at great profit and bought record bonds in the money market, which have got good returns.
What is the Surplus Amount of RBI
In simple words, the Reserve Bank does not have to pay any kind of income tax in its income. Therefore, the amount left after fulfilling your needs, the necessary provisions and the required investment is a surplus fund.
Which it has to pay to the government. The income of the Reserve Bank is mainly from the interest received on the money invested in the bond. The surplus that is left after the RBI fulfills its needs has to be transferred to the government.
The largest portion of RBI’s expenditure in the financial year 2017-2018 was Rs 14,200 crore, which was done by the Continuity Fund. The larger the amount will go to the contingency fund (CF), the more the surplus will decrease.
Decision taken in RBI board meeting today
According to media reports, in the central board meeting of RBI, the surplus amount of Rs 99122 crore has been approved to be transferred to the government.
Know about RBI balance sheet
The balance sheet of RBI is not like that of ordinary companies. 26% of RBI’s property is in the form of reserves.
Its investment is done abroad, in Indian government bonds and gold. According to the data, RBI has a gold reserve of around 600 tonnes. When combined with the foreign exchange reserves, it constitutes 77 per cent of the total assets of the bank.
RBI holds Emergency Fund (CF)
In general language, it is a special provision that is used to meet the sudden needs due to managing the monetary policy and exchange rate.
It is clear that this fund is used according to the needs and in case of any emergency. In 2017-18, the size of CF was 2.32 lakh crores, which was 6.4% of the total assets of RBI.
For three years from FY 2013-14, RBI did not hold any money in CF as the technical committee believed that it already has a lot of ‘buffer’ (economic capital / buffer capital). However, in the past year, the bank held CF.
