India cenbank gives sharply lower surplus of 303 billion rupees to govt

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FILE PHOTO: The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai

MUMBAI (Reuters) – India’s central bank transferred 303.07 billion rupees ($3.91 billion) to the government as a dividend for the fiscal year ending in March 2022 and decided to keep its contingency risk buffer at 5.5%, the bank said on Friday.

The figure suggests a likely shortfall from the government’s budget target of a dividend of 739.48 billion rupees from the RBI and financial institutions, such as state-run banks, mainly the State Bank of India, in the current fiscal year.

In a statement, the Reserve Bank of India (RBI) said its board reviewed the current economic situation, global and domestic challenges and the impact of recent geopolitical developments.

“The board approved the transfer of 303.07 billion rupees as surplus to the central government for the accounting year 2021-22,” the bank said in a statement, adding that its annual report and accounts for accounting year 2021-22 were also approved.

For the nine months to March 2021, the bank had announced a surplus transfer, or dividend, of 991.22 billion rupees. It moved to an April to March accounting year from 2021/22, versus the earlier endpoints of July to June.

Financial institutions usually contribute to a total dividend of about 100 billion rupees to the government on average each year, suggesting that, with the RBI’s lower-than-hoped transfer, the government will miss its target.

At an unscheduled meeting on May 4, the Reserve Bank of India raised the repo rate at which it lends to banks by 40 basis points to 4.40%, for its first change in the rate in two years and its first rate hike in nearly four years.

($1=77.5050 Indian rupees)

(Reporting by Swati Bhat and Aftab Ahmed; Editing by Clarence Fernandez)