RBI TRANFERS ₹57128 CRORE DIVIDEND TO THE CENTRAL GOVERNMENT

On the 14th of August, RBI approved a dividend of ₹57128 crores, under the guidance of the governor of the RBI, Mr. Shaktikanta Das. The governor along with the Central Board, meet every year and take decisions regarding important economic scenarios. This year, the meeting took place online. The board, on Friday, reviewed then current economic scenario, the global and domestic problems and also any monetary step or policy change taken up by the RBI to help the economy which has been heavily impacted by the Covid-19 situation and also the impact of the decisions already taken. They also had a discussion regarding the formation of an Innovation Hub. The annual balance sheet of RBI (2019-2020) was also discussed at this meeting.

Why is RBI transferring the surplus to the government?

As we all know, RBI was formed in 1935 as a private shareholder’s bank but was nationalized in 1949. And so, according to the RBI act of 1937, it has to transfer over the surplus money (money left after all expenditures have been taken care of), to the central government.

How does RBI earn money?

1. The most important avenue is Dollar sale. RBI has been engaging in the buying and selling of dollars for a long time now. Till date, if we average the amount that RBI ha spent on buying dollars, each dollar it has bought comes to roughly ₹52, the current price of $1 being approximately ₹75.

2. Interest on foreign currency reserve that has been invested in different foreign government bonds and central banks etc.

3. They engage in buying and selling of government bonds.

4. Revaluation of precious assets like gold. Gold prices have increased significantly so the assets held by RBI, of which gold plays a significant part, has also drastically increased and thus leading to an increase in their asset value.