RBI to transfer Rs 30,307 crore as surplus for govt. for FY22

The Reserve Bank of India RBI will transfer Rs 30,307 crore as surplus for the government for fiscal ended March 2022, down 69% from the Rs 99,126 crore in the year ended March 2021 and lower than the Rs 74,000 crore budgeted by the government for the current fiscal. The transfer amount was finalised at the central bank board meeting that approved the annual report for the last fiscal, RBI said in a release. The RBI had to pay banks which caused their surplus liqudity to fall in the transferable surplus, according to economists. A cost of Rs 21000 -- 24500 cr would be incurred in FY 22 due to the heavy investment of RBI in reverse repo auctions which had an average of Rs 6 to 7 lakh crore a day at an average cost of even 3.5%. As surpluses would have been higher, this would have accrued to the government, said Madan Sabnavis chief economist atsaid in a note. Sabnavis said that the shortfall from government's budgeted estimates will have to be made up of dividends from public sector institutions. The government is targeting a total of 74,000 cr for the year. The public sector banks, PSBs and other public financial institutions have a surplus from the RBI, PSBs. This will mean that a large part of the profits of PSBs and PIs public institutions will have to be transferred to make good this number or else there will be a slippage, Sabnavis said. The board decided to keep the contingency risk buffer at 5.50% at the lower end of the range, according to RBI's economic capital framework ECF. The buffer is intended to meet unexpected and unforeseen events, including depreciation of securities, systemic risks and any risk arising from the special responsibilities that are enjoined upon the Reserve Bank at the end of the fiscal. Details of RBI's account will be available when the central bank releases its annual report in the next few days. The RBI board looked at the current economic situation, global and domestic challenges, and the impact of recent geopolitical developments. Besides Governor Shkatikanta Das, all four deputy governors, Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao and T. Rabi Sankar also attended the meeting. Other directors of the central board, Satish K. Marathe, S. Gurumurthy, Revathy Iyer and Sachin Chaturvedi, along with economic affairs secretary Ajay Seth, financial services secreatry Sanjay Malhotra, also attended the meeting.