Why does RBI give dividend to the government?
Rbi It works as a bank for the government. To fulfill this responsibility, he also has to manage money. For Rbi Many types of operation conducts. This makes him profitable, which in the language of financeSurplus) It is called. RBI transferred a part of this surplus to the government every year, which is called dividend.
What is the rule for dividend?
The central bank does this under the Economic Capital Framework (ECF), in which 2019 was amended. The amendment was made on the recommendation of a committee, headed by former RBI Governor Vimal Jalan. According to the ECF, provision has to be done for RBI for a particular level of risk under the Cutgent Risk Buffer (CRB). This can be 6.5 to 5.5 percent of the RBI balance sheet. The RBI can transfer the money that is left after this provisioning.
How does RBI have income?
RBI has many income in many ways. The biggest stake in this is the interest of the government’s bonds and treasury bills. Second, RBI gets returns from foreign exchange reserves. The central bank invests this return in foreign assets considered safe. The RBI has a capital gain on this. Recently, RBI has increased its investment in gold. Gold prices have risen in the last few months. RBI has benefited from this.
Also read: SEBI: 1 billion dollar profit in a few seconds, what will be revealed by SEBI investigation?
The RBI also sells and purchases government bonds in the open market. This is called Open Market Operation (OMO). This gives RBI trading income. Especially when the interest rate rises, it has more income. Apart from this, the RBI charges the banking services to the government and other banks. This also makes him income.
How many dividends can RBI announce?
In the union budget presented on 1 February this year, the government had estimated a dividend of Rs 2.56 lakh crore from RBI and other government financial institutions. But, according to the news, the government can get much more dividend from RBI this time. It can be between 2.5 to 3 lakh crore rupees. This will be for dividend financial year 2024-25.
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