RBI Board Approves Rs 87,416 Crore Dividend Payout To Centre For 2022-23

The Board in its meeting reviewed the global and domestic economic situation and associated challenges including the impact of current global geopolitical developments

The Reserve Bank of India (RBI) on Friday approved Rs 87,416 crore dividend payout to the central government for 2022-23, nearly triple of what it paid in the previous year. The dividend payout was Rs 30,307 crore for accounting year 2021-22.

The decision was taken at the 602nd meeting of the Central Board of Directors of Reserve Bank of India held under the chairmanship of Governor Shaktikanta Das. "The board approved the transfer of Rs 87,416 crore as surplus to the central government for accounting year 2022-23, while deciding to keep the Contingency Risk Buffer at 6 per cent," RBI said in a statement.

The Board in its meeting reviewed the global and domestic economic situation and associated challenges including the impact of current global geopolitical developments. The Board also discussed the working of the RBI during the year April 2022 – March 2023 and approved the Annual Report and accounts of the Reserve Bank for the accounting year 2022-23. 

Deputy Governors Mahesh Kumar Jain, Dr. Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar, and other Directors of the Central Board attended the meeting. Ajay Seth, secretary, Department of Economic Affairs also attended the meeting.

In Budget 2023-24, the government had estimated to receive Rs 48,000 crore as dividends from the RBI, nationalised banks, and financial institutions (FIs), as per the Union Budget documents. This was higher than the revised estimate of Rs 40,953 crore for Budget 2022-23.

The RB), which serves as the government's banker, pays a dividend from its surplus profit annually to aid the government's finances. The RBI Act of 1934, Chapter 4, section 47 mandates that any profits earned by the RBI from its operations should be transferred to the government. 

Section 47 of the RBI Act requires the RBI to make provisions for bad debts, depreciation in assets, staff contributions, superannuation funds, and other expenses provided by bankers. The remaining profits are then paid to the central government. 

The RBI generates its profits primarily from interest earned through the sale and purchase of government securities, lending to banks, and interest on bond holdings through open market operations. The surplus profit is calculated by subtracting operating expenditures and other costs stipulated in Section 47 of the RBI Act. It can be understood as the residual income earned after subtracting the expenditure component from the RBI's balance sheet.

The RBI is obligated, as per Section 20 of the RBI Act 1934, to undertake receipts and payments for the Centre and conduct exchange, remittance, and other banking operations.