Government may get lesser dividend from RBI and banks

The government has projected a conservative estimate of dividends from Reserve Bank of India and banks for FY’23 at Rs 74,000 crore, though the revised estimates for FY’21-22 at Rs 1 lakh crore is almost double the Rs 53000 budgeted for the year. A majority of the payout is reckoned to be from RBI’s surplus.

Reserve Bank’s earnings is expected to fall due to decline in interest rates in overseas bank deposits and securities (in which foreign exchange reserves are parked), though yields have started hardening only towards end of the fiscal.

Also deployable reserves may not rise substantially as forex reserves have risen by only $ 57 billion so far in the current fiscal compared to $ 101 billion in the same period a year ago. Besides there interest outgo to banks on account of the central bank’s liquidity absorption from the banking system is expected to be higher this year.

The estimate is Rs 27,400 crore lower than the Revised Estimates (RE) of Rs 1,01,353 crore under the head of dividend or surplus of Reserve Bank, nationalised banks & financial institutions during the current fiscal.

It may be recalled that the RBI has paid a dividend of Rs 99,122 crore. This dividend payout was for the financial year 2020-21 but paid during the current financial year in May last year. RBI’s balance sheet size increased by 6.99 per cent for the year ended March 31, 2021 though it was a truncated year as it shifted to March account closing year practice from June earlier. The balance sheet growth mainly reflecting its liquidity and foreign exchange operations. While income for the year decreased by 10.96 per cent, the expenditure decreased by 63.10 per cent, which helped the central bank transfer a record surplus to the government during the year.