The RBI said in a release that the transfer amount was finalized at the central bank board meeting, which approved the annual report for the previous fiscal.
Economists said the drop in the negotiable surplus was due to an increase in the interest the RBI had to pay to banks that held their surplus liquidity in the reverse repo window.
“In FY22, as RBI has invested heavily in reverse repurchase auctions with an average of Rs 6 to 7 crore per day, the average cost is even 3.5%, which means a cost of Rs 21,000-24,500. This will accrue to The government as a surplus would have been higher,” chief economist Madan Sabunavis said in a note.
Sabunavis said the shortfall in government budget estimates would have to be covered by dividends from public sector agencies.
“This year the government is targeting dividends/surpluses of around Rs 74,000 from RBI, PSB (public sector banks) and other public financial institutions. This means that most of the profits from PSB and PI (public bodies) will have to be shifted to cover this figure , otherwise there will be slippage,” Sabunavis said.
The board also decided to keep the contingency risk buffer at 5.50% of the lower bound of the range under the RBI’s Economic Capital Framework (ECF). The buffer is drawn from the RBI’s surplus funds at the end of the fiscal year, and is a special provision to deal with unexpected and unforeseen contingencies, including devaluation of securities, risks arising from currency/exchange rate policy operations, systemic risks and any risks arising from the special obligations imposed by the Reserve Bank.
Details of the RBI account will be provided when the central bank releases its annual report in the coming days.
The RBI Board also reviewed the current economic situation, global and domestic challenges and the implications of recent geopolitical developments.
In addition to Governor Shkatikanta Das, all four Deputy Governors Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao and T. Rabi Sankar also attended the meeting. Other directors of the Central Committee, Satish K. Marathe, S. Gurumurthy, Revathy Iyer and Sachin Chaturvedi, as well as Minister of Economic Affairs Ajay Seth and Secretary of Financial Services Sanjay Malhotra were also present.