Reserve Bank of India To Transfer Record Dividend To Treasury

The Reserve Bank of India will again make a record surplus transfer to the government for this April-to-March fiscal year, a windfall that economists polled by Reuters said would not be sufficient to prevent New Delhi from missing ?its fiscal deficit target. 

The RBI, which is due on Friday to report how much it will hand over ?to the Treasury, is expected to transfer a sizable amount this year, in large part from profitable U.S. dollar sales after it intervened in the foreign exchange market to stem the rupee's slide.

A Reuters poll of 25 economists taken on May 19 and 20



showed the RBI is likely to transfer ?a record dividend of 2.9 trillion rupees to 3.2 trillion rupees ($30.0 billion to $33.1 billion) to the Treasury, matching the ?government's forecast in this fiscal year's budget. A slim majority, 12 of 22, said the Treasury is becoming ?too reliant on these transfers, which have surged 55-fold over the past two decades.

Under recently revised rules that were originally laid ?out in 2019, the RBI is recommended to maintain a contingency reserve of 4.5% to 7.5% of its balance sheet and transfer the rest ?to the government. The reserve is currently maintained at 7.5%.