100-bp repo hike needed ‘very soon’: MPC member Varma

“For the year, the government is targeting Rs 74,000 crore as dividend/surplus from the RBI, PSBs and other public financial institutions. This will mean that a large part of profit of PSBs will have to be transferred to make good this number or else there will be a slippage,” Sabnavis said. In the reverse repo, banks make a short-term, guaranteed loan to the central bank.

The RBI board has decided to maintain the Contingency Risk Buffer at 5.5 per cent. The RBI board also discussed the working of the RBI during the year April 2021– March 2022 and approved the Annual Report and accounts for the accounting year 2021-22. In 2018-19, the RBI Board approved a transfer of Rs 1,76,051 crore to the government, including a surplus or dividend of Rs 1,23,414 crore, and a one-time transfer of excess provisions amounting to Rs 52,637 crore.

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The RBI’s “surplus” is the excess of income over expenditure in accordance with Section 47 (Allocation of Surplus Profits) of the Reserve Bank of India Act, 1934. The RBI is also supposed to manage the borrowings of the Central and state governments, supervise or regulate banks and non-banking finance companies and manage the currency and payment systems. The central bank’s income comes from the returns it earns on its foreign currency assets, which could be in the form of bonds and treasury bills of other central banks or top-rated securities, and deposits with other central banks.

When Urjit Patel was the RBI Governor, there was a spat between the Centre and the central bank over a proposal by the Finance Ministry seeking to transfer a surplus of Rs 3.6 lakh crore — over a third of total reserves —to the government. The RBI then formed a committee to work out a formal structure to decide the quantum of surplus to be transferred to the government.