February 16, 2020 1:45:45 am
After nearly eight decades, the Reserve Bank of India (RBI) has decided to change its accounting year from July-June to April- May. While the RBI accounts will now be aligned with the central government accounts, this move is likely to obviate the RBI’s need to transfer an interim dividend to the central government, a practice which has been adopted in the past few years.
Accordingly, the next accounting year will be a nine-month period which starts from July 2020 and ends on March 31, 2021. Thereafter, all the financial years will start from April every year, the RBI said on Saturday. “The board recommended aligning the financial year of the RBI, currently July-June, with the Government’s fiscal year (April-March) from the year 2020-21 and approved forwarding a proposal to the Government for its consideration,” it said.
The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a more transparent presentation of the RBI’s annual accounts and change in its accounting year from July to June to April to March from the financial year 2020-21. The panel’s report, which was accepted by RBI board, noted that changes in the format of presentation of the balance sheet would need necessary amendments to the RBI General Regulations. “The information may, therefore, be presented as a Schedule to the balance sheet till such time the processes for completing a change in the style of balance sheet presentation are formalised,” it said. The committee had recommended that the RBI accounting year (July to June) may be brought in sync with fiscal year (April to March) from 2020-21. “The RBI would be able to provide better estimates of the projected surplus transfers to the government for the financial year for budgeting purposes,” the committee said.
Experts said the change in the fiscal year could reduce the need for interim dividend being paid by the RBI. The payment of an interim dividend may then be restricted to extraordinary circumstances, the Jalan panel said.
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