Mumbai, May 22 (IANS): The Board of Directors of the Reserve Bank of India on Wednesday approved the transfer of Rs 2,10,874 crore as surplus to the Central government for the accounting year 2023-24.

This is the highest-ever dividend that the RBI has transferred to the Government and will strengthen its fiscal position. The government can reduce its borrowing which will leave more funds in the banking sector for loans to corporates and consumers to spur economic growth.

The amount is higher than the government expected as the interim budget documents for the ongoing financial year show a dividend of Rs 1.02 lakh crore from the RBI, public sector banks and other financial institutions.

Interestingly, the RBI has made the higher amount available to the government after increasing the risk provisioning under the Contingent Risk Buffer (CRB) to 6.5 per cent for FY 2023-24.

“With the revival in economic growth in FY 2022-23, the CRB was increased to 6.00 per cent. As the economy remains robust and resilient, the Board has decided to increase the CRB to 6.50 per cent for FY 2023-24,” the RBI said in a statement after the meeting of the Board of Directors headed by Governor Shaktikanta Das.

During accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of the Covid-19 pandemic, the Board had decided to maintain the CRB at 5.50 per cent of the Reserve Bank’s balance sheet size to support growth and overall economic activity at the time of the crisis.

According to the RBI statement, the transferable surplus for the year (2023-24) has been arrived at on the basis of the Economic Capital Framework (ECF) adopted by the Reserve Bank on August 26, 2019, as per recommendations of the Expert Committee to Review the extant Economic Capital Framework of the Reserve Bank of India (Chairman: Dr. Bimal Jalan).

The Committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5 to 5.5 per cent of the RBI’s balance sheet.

The Board also reviewed the global and domestic economic scenario, including risks to the outlook. It also discussed the working of the central bank during the year April 2023–March 2024 and approved its Annual Report and Financial Statements for the year 2023-24.