The RBI board, headed by governor Shaktikanta Das, which met in Mumbai on Monday, approved a transfer of Rs 1,76,051 crore to the government. This includes Rs 1,23,414 crore of surplus or dividend for the year 2018-19 and Rs 52,637 crore of excess provisions — a one-time transfer which is also a first for the central bank.
RBI has decided to deposit a record Rs 1.76 lakh crore in the government's account. However, the 'windfall' isn't as big as it seems because the government had already accounted for Rs 90,000 crore in this year's budget (80% more than it got in the previous year). Add to it the Rs 28,000 crore that the RBI had paid as 'interim' dividend in the last financial year and the 'bonanza' comes down to about Rs 58,000 crore.
Not every year
RBI's future payouts to the government will now be driven by a formula which will also put constraints on the amount paid out. RBI's reserves relevant to this payout formula broadly fall in two categories: the value of gold and foreign currency that the central bank holds (revaluation reserve) and a contingency fund meant for meeting unexpected situations. The Jalan panel has recommended that the contingency reserves be maintained between 5.5% and 6.5% of the central bank's total assets. The RBI board chose to stick to the lower 5.5% level. Since, the contingency fund now was 6.8% of assets, it allowed the RBI to pass on the balance 1.3% to the Centre (which worked out to Rs 52,637 crore). Also, since it didn't need to put a part of its Rs 1.23 lakh crore income for 2018-19 into the contingency fund (as it was above the required level), that amount too went to the government (taking the total to Rs 1.76 lakh crore).
source: https://timesofindia.indiatimes.com/business/india-business/so-what-can-govt-do-with-rs-1-76-lakh-crore-windfall-from-rbi/articleshow/70872009.cms
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