The Reserve Bank of India (RBI) is expected to discuss a dividend payout to the government in its upcoming board meeting on May 19. Last year, the RBI paid Rs 30,307 crore as dividends to the government.
Meeting Details
Referring to sources with knowledge of the matter, a Bloomberg report states that the RBI Board meeting will be held in Mumbai. The central bank typically reviews its finances during the May board meeting and determines how much it can transfer to the government.
Dividend Estimates
In the Union Budget documents for 2023-24, the government estimated to receive Rs 48,000 crore as dividends from the RBI, nationalized banks, and financial institutions. This estimate is higher than the revised estimate of Rs 40,953 crore for the previous fiscal year (2022-23).
However, analysts, including those at Standard Chartered Plc, project that the RBI will transfer between Rs 1 lakh crore to Rs 2 lakh crore to the government as a dividend for the year ended March 31.
RBI’s Role in Government Finances
The RBI, as the government’s banker, pays a dividend from its surplus profit annually to support the government’s finances. This obligation is mandated by the RBI Act of 1934, Chapter 4, section 47, which stipulates that any profits earned by the RBI from its operations should be transferred to the government.
The RBI’s upcoming board meeting on May 19 will address the potential dividend payout to the government. Last year’s dividend payment of Rs 30,307 crore highlights the importance of the RBI’s contribution to the government’s finances.
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