In Graphic Detail | How RBI's dividend gives Centre a much-needed helping hand

The Reserve Bank of India (RBI) is responsible for the management, regulation, and supervision of various aspects of the economy. It is also a key source of funds for the government.

In the course of performing its duties, the RBI generates revenue. While it also has certain expenditures such as those incurred while printing currency notes and to provide for any losses on its investments, it is left with a pile of surplus money at the end of its accounting year. This surplus money is transferred to the central government in the next financial year as a dividend. And this dividend can be massive.

As shown in the chart above, the RBI's dividend to the Centre dipped to Rs 30,659 crore following demonetistion. One of the reasons for this was the central bank having to rapidly print new notes to replace the banned ones. But things took a turn for the better in 2018-19, when the dividend was a colossal Rs 1.76 lakh crore. Transferred in 2019-20, this dividend included the transfer of the RBI's 'excess reserves.