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RBI Annual Report: Central Bank’s Annual Income More Than Doubled In 2018-19

RBI’s total income rose 146 percent to Rs1.93 lakh crore in 2018-19, allowing it transfer a record-high surplus to the government.

The Reserve Bank of India’s logo is pictured at its headquarters in Mumbai. The transfer of the excess RBI reserves brings down its contingency fund to 5.5 percent of its balance sheet. (Photographer: )
The Reserve Bank of India’s logo is pictured at its headquarters in Mumbai. The transfer of the excess RBI reserves brings down its contingency fund to 5.5 percent of its balance sheet. (Photographer: )

The Reserve Bank of India’s annual report shows that the central bank’s total income more than doubled in 2018-19, allowing it to transfer a significantly higher surplus of Rs 1.23 lakh crore to the Government of India.

The RBI Annual Report 2018-19 released on Monday showed that the central bank had a total income of Rs 1.93 lakh crore for the financial year ended March 31, 2019—up 146.5 percent from a year ago.

Expenditure for the year, meanwhile, fell to Rs 17,045 crore, from Rs 28,277 crore in 2017-18. The fall in expenditure primarily came due to lower provisions. The expenditure on printing of notes also dropped 2 percent year-on-year to Rs 4,811 crore.

RBI made provisions worth Rs 64 crore towards asset development fund, as compared with Rs 11,190 crore towards contingency fund in FY18.

Why The Jump In Income?

According to RBI, its net income from domestic sources more than doubled to Rs 1,18,078 crore in 2018-19 from Rs 50,880 crore in 2017-18, mainly on account the following factors:

  • Coupon income due to an increase in the portfolio of rupee securities
  • Net income on interest under LAF/MSF operations due to increase in net liquidity injection to the banking system and
  • Writeback of excess risk provision from the contingency fund.

Foreign sources contributed Rs 29,143 crore to the other income. Gains from forex transactions during FY19 stood at 28,998 crore, as compared with a loss of Rs 7,139 crore a year ago.

The RBI annual report flags off a change in the method of accounting for gains on foreign exchange operations. Such a change had originally been suggested by the YH Malegam Committee in 2013.

During the year, exchange gain/loss has been computed using weighted average cost method resulting in an impact of Rs 21,464 crore.
RBI Annual Report

Change In Reserves

Earlier this week, RBI's central board approved a surplus transfer of Rs 1.76 lakh crore to the government, as compared with Rs 50,000 crore year-on-year. This included Rs 1.23 lakh crore worth surplus transfer and over Rs 52,637 crore in excess provisions transferred to the government.

The transfer in the excess reserves brings down the central bank’s contingency fund to 5.5 percent of its balance sheet, in line with recommendations of the Economic Capital Framework Committee headed by former RBI Governor Bimal Jalan.

As a result, the contingency fund stands reduced to Rs 1.96 lakh crore as of the end of 2018-19 compared to Rs 2.32 lakh crore a year ago.

The Jalan committee had also recommended that the Currency and Gold Revaluation Account be maintained as is and no unrealised gains be transferred from it.

The RBI annual report shows that the CGRA remains at Rs 6.6 lakh crore compared to Rs 6.91 lakh crore a year ago.

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