Last Updated : Jan 05, 2018 05:16 PM IST | Source: CNBC-TV18

RBI likely to 'green signal' extra dividend to the Centre

The Centre had sought an additional dividend of Rs 13,000 crore from the central bank.

CNBC TV18 @moneycontrolcom

The Reserve Bank of India (RBI) is likely to give a 'green signal' for extra dividend to the government, according to a report by CNBC-TV18.

The Centre had sought an additional dividend of Rs 13,000 crore from the central bank. However, it remains unclear whether RBI will accede to the government's request.

RBI had earlier granted a dividend of Rs 30,659 crore to the Centre, almost half of what the government had expected, according to the report.

For the past three years, the dividend was around Rs 60,000 crore to Rs 65,000 crore per annum. However, prior to that, the dividend granted by the RBI was as low as Rs 10,000 crore per annum.

The RBI had paid a dividend of Rs 65,876 crore in FY 2015-16.

Why does the RBI pay a dividend?

The RBI was founded in 1934 and has been operating according to the Reserve Bank of India Act of 1934. Chapter 4, section 47 of the Act, titled “Allocation of Surplus funds” mandates for any profits made by the RBI from its operations to be sent to the Centre.

The original provision states:

“After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 2[and for all other matters for which provision is to be made by or under this Act or which] are usually provided for by bankers, the balance of the profits shall be paid to the Central Government.
First Published on Jan 5, 2018 04:16 pm
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