Finance 

RBI Halves Dividend Payout In FY17

The Reserve Bank of India has Reduced the dividend transfer to half of the previous year’s dividend transfer. In year 2017 the yearly dividend transfer to the government was at Rs 30,659 crore. This may potentially upset the government’s fiscal calculations.

RBI

As per the estimation of the government, it is expecting to earn about Rs 58,000 crore as dividend from the RBI. However, the government is also expecting that the lower payout may force the Centre to borrow more from the market, which may widen the fiscal deficit for year 2018.

RBI has transferred approximately Rs 65,876 crore in year 2016, which was Rs 20 crore less than the year ago’s dividend transfer. Earlier the dividend transfer was about 65,896 crore in 2015.

The reason behind the lower dividend payout is demonetisation and returnee currency notes. These two factors are held responsible that could lead to a windfall for the government.

In year 2015-16, the RBI had paid Rs 65,876 crore as dividends to the government. The RBI follows a financial year from July to June. The analysts are complexed with this move of RBI and sharp drop in dividend payout.

A significant jump was expected in the central bank’s dividend transfer to the Centre due to demonetization. On the other hand, RBI has not given any specific reason for the lower dividend transfer. After demonetization, the additional costs for the central bank  is needed to print new currency and manage the excess liquidity generated due to the sudden inflow of deposits into the banking system.

RBI transfers the surplus generated from its functions to the government by the end of the fiscal year. Surplus is generated by accounting funds transferred to the contingency reserve as well as the asset development fund.

From last two years, the RBI has transferred the complete surplus generated to the government through the dividend.

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