THE RECORD SURPLUS TRANSFER OF RBI TO GOVERNMENT OF INDIA Rs. 2.11 LAKH-CRORES ( Rs. 2.11 Trillion ) FOR THE FINANCIAL YEAR 2023-24 IS A VERY GOOD NEWS IN NATIONAL INTEREST

THE RECORD SURPLUS TRANSFER OF RBI TO GOVERNMENT OF INDIA Rs. 2.11 LAKH-CRORES (Rs. 2.11 Trillion ) FOR THE FINANCIAL YEAR 2023-24 IS A VERY GOOD NEWS IN NATIONAL INTEREST

 

Dear Readers,

You must have gone through some News that came in public media extensively published two days back that RBI's Central Board of Directors have approved the Surplus Transfer of Rs. 2.11 lakh-crores ( Rs. 2.11 Trillion ) to Government of India for the financial year 2023-24.

 

I am giving some links of news reports that I have read and picked up for your convenience to read, however, you can chose and read any other publication by your own choice from the public domain, there are many:

 

1.      Money Control News Report of 22-May-2024:

RBI board approves record surplus transfer of Rs 2.11 lakh crore to government for FY24

https://www.moneycontrol.com/news/business/rbi-to-transfer-of-rs-2-11-lakh-crore-as-dividend-to-govt-for-fy24-12729396.html

 

2.     The Hindu News Report of 22-May-2024 :

RBI board approves transfer of ₹2,10,874 crore surplus to Centre for FY24

https://www.thehindu.com/business/rbi-board-approves-transfer-of-210874-crore-surplus-to-centre-for-fy24/article68203941.ece

 

This is definitely a Very Good News in the National Interest.

I am explaining in brief about it in case some of you are not aware of some facts, that could be in your knowledge for better:

 

1.    Why RBI ( Reserve Bank of India ) has to transfer surplus to Govt of India?

Reserve Bank of India as the Central Bank of India has been established under the RBI Act, 1934, as an Institution to take care of the "Money Matters" of the Nation of India, more as an Autonomous Institution. Also under the Banking Regulation Act, 1949, RBI has been mandated as the Regulator of Banks and Financial Institutions of India to maintain a regulated and an orderly environment of Banking and Finance in India.

Under the Mandate of RBI Act, 1934, though RBI has been established as an autonomous National Institution to operate and handle the "Money Matters" of the Nation of India, it also remains as an arm of Operations of the Nation of India and the Surplus Generated from the Operations of RBI is owned by the Nation, and also under the mandate of the said RBI Act, the RBI is supposed to transfer the Annual Surplus Generated by RBI from its operations, after leaving a part of it towards the inherent RIsk Factors of the Operations of the RBI, and that part is presently 6.5%. If means in simple terms, out of the Surplus Generated by RBI Annually it can retain 6.5% ( that is the present norm ) as committed funds towards RBI's inherent RISK Factor of the Operations, and the Balance has to be transferred to Government of India's hands as National Resources generated to be used for the consumption of the Nation of India. This 6.5% level of Present Risk Factor Fund Retention has been determined by empowered committee that was constituted last for deciding on this subject. This present level has evolved over varying figures of that existed over the years and decades, by the decisions of various empowered committees constituted from time to time over the years and decades.

 

2.      Who will use the Surplus Transferred by RBI to Government of India ?

It is the Government of India who will put the Surplus Transferred by RBI, as National Resources available in the hands of the Government of India to put it for effective and efficient consumption of the Nation by utilizing it under the Budgetary Provisions passed by the Hon'ble Parliament of India, It is National Resources, that can be sued for Current or Capex Consumption of the nation within the Frame Work of Budget Approved by the Parliament.

 

3.     How it helps the Government of India ?

The Govt of India primarily, needs funds( money ) to be deployed or consumed for various current and capex ( capital expenditure ) expenditures, it proposes to make in the Budget Approved. For its funds needs it adopts collection of taxes ( both direct and indirect ) and other funds generation mechanisms and over the Borrowings. The RBI Surplus Transfer helps as generated funds, it can reduce the Government Borrowing, which is not free and has a cost for the Nation to pay.

 

4.    How will This Surplus Transfer from RBI help the Government of India this time?

The Rs. 2.11 Lakh-Crores Surplus Transfer of the financial year 2023-24 from RBI to Government of India is a Real and Windfall Bunty to be available to the New Government whoever will take over the Reigns at the Central Government at New Delhi after the June-04 General Election Results.

This is the amount of Highest Surplus Transfer by RBI to Government of India in any year, and it is the more than double of the last financial year. So very significant and very good news in the interest of the Nation. As this Huge Sized Bunty will give tools to the Government of India to do more public and developmental spending without depending on too much of borrowing that it could have been forced to do in absence of this huge bunty from RBI.

 

5.   What are Primary Sources of Surplus Generated by RBI ?

As everyone knows, RBI as the Central Bank of India is the Banker to the Banks, which means it is the Lender to the Banks. When RBI lends money to the Banks, it is not free, it charges certain level of interest rate, which is decided by the MPC(Monetary Policy Committee) of RBI from time to time. The Interest Charged by RBI to the Banks for its lending is also quite a bit, as for example, its REPO Rate ( one of the Lending Rates charged to the Banks ) is 6.5% which is in fact one of the highest in the world level now, when all the Central Banks of different nations of the world are considered. This Repo Rate of 6.5% has been prevailing for a longer time, and it prevailed for the whole financial year of 2023-24, hence RBI got good surplus generated from its lending. Also, RBI Generates good surplus from selling Foreign Currency especially US Dollars that is the present reserve currency of the world, for the Import needs of the nation and also for its market intervention operations, to reduce too much volatility of the value or Indian Rupee in the World Market and especially against USD. For example, RBI would have got the USD when the USD/INR was Rs. 75/- and it sells when the USD/INR goes to Rs. 83/- while there is a Shortage of USD available in India. Normally when the Indian Oil Companies have to pay for our Crude Oil Imports they have to buy lot of USD and also when the FIIs ( Foreign Institutional Investors ) sell their Stocks (Shares) in the Stock Market to realize their Profit out of it and repatriate to their foreign countries, they have to convert it to USD by buying USD from India, that is the time when USD gets into shortage and depreciates INR where RBI has to intervene by selling USD in Indian Market to make USD available and to protect INR falling too much against USD by exchange value. Thus from USD Selling RBI in fact makes a lot of surplus, that we see in terms of the huge Surplus being transferred to Govt of India during the FY 2023-24.

 

While I say that RBI has performed very well and it is definitely a very good news that it is Transferring a Huge Bunty of Rs. 2.11 Lakh-Crores Surplus, to Government of India for the Financial Year 2023-24 and RBI should be complemented for that; however, as a Citizen of India I have certain observation in the operation of RBI for the Protection of the Customers of the Banks, particularly for the Crores and Millions of Bank Customers while the Banks are under the Regulation of RBI, errors are possible to happen for the Bank Customers and Banks are likely to err, and some private banks take it for granted and try to cow down the small customers by their might and taking loop hole in the RBI's Bank customer handling procedure, for which I have sought appointment from the Central Board of Governors of RBI and the Senior Management Group ( from Governor to ED level ) to be discussed. I hope they will be sportive to give appointment to me, even if I am only a lone and ordinary citizen of India.

I can not discuss the further details of it to you in public, as it is confidential now and may be known to a few IRMANs who have been working with RBI.

 

I sincerely hope and expect that, they will give appointment to me for the matter to be discussed and resolved sportively in the individual and National Interest.

 

With Best regards,

Dr. Nimain Charan Biswal,

Mumbai,India

 

 


About the Author: Dr. Nimain Charan Biswal is a B.Sc.(Agri. Science and Technology), M.B.A. and Ph.D.(Management Area ) by qualifications; and he has 38+ years of work experience in both industrial and development sectors in diversified fields of social importance. He has been educated at Orissa University of Agriculture and Technology (OUAT)-Bhubaneswar, Institute of Rural Management Anand (IRMA) and Gujarat University (with Resource Support of IIM-Ahmedabad). He is further educated at IIM-Calcutta, XLRI-Jamshedpur, Apple Computer Industries and Spar Inc., USA. He has worked for reputed National and International Organizations in Senior/Top Management Capacities at Board level as well as Managing Director and CEO. He is a management expert covering extensive areas from management in industrial sectors, management in agriculture and dairy, development management to management of public systems. He is a prominent professional of India and known Internationally as well. He lives at Mumbai in India.

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