INSUBCONTINENT EXCLUSIVE:
Government has, in all, budgeted Rs 74,140 crore in dividends from the RBI and the state-run lenders.The Reserved Bank of India approved an
This is the second straight year that the RBI has announced an advance payment to Prime Minister Narendra Modi's government.In approving the
measure, the RBI is emulating Turkey's central bank that came to the aid of its government before municipal elections in March seen as a
referendum on President Recep Tayyip Erdogan's rule
The RBI dividend will help PM Modi's government partly bridge a budget gap and could be key to funding an income support programme for
farmers.The government needs cash after allocating Rs 20,000 crore toward the first installment of the $10.5 billion program by March 31
The cash support -- handing about 12 crore farmers with up to 2 hectares (4.9 acres) three payments of Rs 2,000 per year -- was PM Modi's
last attempt at reversing fortunes after his Bharatiya Janata Party which lost control of three key states in regional elections in
December.The transfer is "based on a limited audit review and after applying the extant economic capital framework," the central bank said
The central bank's financial year runs from July to June.The government has, in all, budgeted Rs 74,140 crore in dividends from the RBI and
the state-run lenders in the year ending March 31 and has penciled in Rs 82,910 crore for the next year.Public StandoffThe demand on the RBI
for more dividends and to part with a greater share of its capital has been a contentious issue between the central bank and the government
It resulted in a public standoff last year and is seen as one of the reasons for the abrupt exit of then Governor Urjit Patel.The finance
ministry has asked the central bank to transfer about Rs 27,000 crore of surplus capital withheld by it in the previous two financial years
Separately, finance ministry officials estimate the RBI has at least Rs 3.6 lakh crore more capital than it needs, which they say can be
used to help bolster weak Indian banks.However, a recent study by the Centre for Advanced Financial Research and Learning, a Mumbai-based
think tank, showed the central bank has insufficient capital, and much less a surplus to hand over to the government.
