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Showing posts from June, 2021

RBI dividend to Government of India.

  RBI board approved to transfer Rs. 99,122 crores as dividend to Central Government against the estimations of 60,000 crores. This was the second-highest dividend payout in the last 9 years. This time dividend was declared for a period of 9 months only due to a change of the accounting year. The primary reasons for the rise in dividend are high forex reserves and Intrest income and changes in accounting practices. As the Central government is the single shareholder in RBI, they need to pay dividends. Generally, RBI needs to keep a buffer of 5.5% to 6.6%. This time dividend was paid by a risk buffer of 5.5%. But the fact is dividend is paid by " Printing of money to the extent of dividend payout." Probably government is the only biggest single shareholder to enjoy all the dividends, without any business. However, this will cover the Fiscal deficit.