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RBI has declared a dividend of Rs 87,416 crore to the government, which is nearly triple of what was paid in the previous financial year, Rs 30,307 crore. The dividend is also much higher than the Rs 48,000 crore dividend from banks estimated in the budget. Economists has said that the surprisingly high dividend has been made possible due to the high volatility in the foreign exchange market which enabled t he RBI to book huge profits through sale of dollars. However, while the sale of dollars at higher rate than purchase registers higher profits, it also diminishes the size of balance sheet, which reduces the need for provisions.
The government’s overall dividend share will be even higher as SBI has raised its dividend payout to Rs 3.11 per share, compared to the previous year’s Rs 7.1. This higher dividend income will enable the government meet the fiscal deficit target of 5.9% of GDP. This will hence reduce pressure to raise market borrowing.
Under the chairmanship of governor Shakuntala Das, the RBI’s central board convened its 602nd meeting on Friday. The meeting focused on evaluating the global and domestic economic landscape, taking into account associated challenges and potential impact of current geopolitical developments.
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