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RBA offers $24.5 billion payout to government

Tuesday, 27 August 2019


India's central goverment has offered the country's federal government a payout of 24.5 billion US dollars that include $17.1 billion of surplus and $7.4 billion of excess contingency provision lying in books of the central bank.

The payout was part of the recommendations made by an expert panel constituted in December 2018 to review the extant economic capital framework of the central bank, the Reserve Bank of India (RBI) as per the statement issued by the Central Bank late on Monday, reports Xinhua.

The recommendations were guided by the fact that the RBI forms the primary bulwark for monetary, financial and external stability, the statement said.

The surplus funds from RBI will enable the government to re-capitalise the public sector banks, establish a development financial institution for infrastructure, reduce market borrowings and avoid the plan of an overseas sovereign bond issue, according to industry experts.

"The transfer of surplus from the RBI should help to offset the expected shortfalls in various tax revenues in 2019-20 and aid the government in meeting its fiscal deficit target," said Aditi Nayar, principal conomist of ICRA, a credit rating agency.

As a result, government securities (G-Sec) yields are likely to ease in the immediate term, she said.