RBI pays government Rs 66,000 crore in dividend

In Banking and Finance
August 14, 2015

The Reserve Bank of India has paid a dividend of nearly Rs 66,000 crore to the government, the highest ever from the central bank in its 80-year history, and 22% more than it paid last year. On a point to point basis, RBI’s dividend payment to the government is up more than four times in as many years. This payment can help

Ease the government’s finances
Help meet its fiscal deficit targets
Provide liquidity to the system so that the rate of interest remains low
Make available funds for the government’s capital expenditure

What are the Sources of Income of RBI?

The three main sources of income are,

The coupon payments it gets on its holding of government securities
The interest it receives from banks which borrow money from it (repo operations)
Interest incomes on its holdings of sovereign bonds like US treasury bills etc.

This year’s dividend payment by RBI is also more than the Rs 64,500 crore that the finance minister had budgeted under ‘Dividend/Surplus of RBI, nationalized banks & financial institutions’.