EDEN IAS

RBI SURPLUS TRANSFER

UPSC CURRENT AFFAIRS | RBI SURPLUS TRANSFER | 27TH MAY | THE HINDU

SYLLABUS SECTION: GS III (Economy)

WHY IN THE NEWS?

  • The Reserve Bank of India (RBI) will transfer Rs 30,307 crore as a surplus.
  • To the gov.t for the fiscal ended March 2022 | RBI SURPLUS TRANSFER.
  • It is 69% down from the Rs 99,126crore in the year end in March 2021 and lower than the Rs 74,000 crore budgeted by the government for the current fiscal.
  • The fall in the transferable surplus is because of the increased interest the RBI had to pay banks which parked their surplus liquidity in the reverse repo window

Reserve Bank Of India’s Source of Earning:

 

 

RBI SURPLUS TRANSFER

RBI’s Expenditure:

  • RBI’s expenditure is mainly on printing of currency notes, on staff, besides commission to banks for undertaking transactions on behalf of the government and to primary dealers that include banks for underwriting some of these borrowings.
  • The central bank’s total cost, which includes expenditure on printing and commission forms, is only about 1/7th of its total net interest income.

About RBI:

  • The Reserve Bank of India was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934.
  • The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated.
  • Though originally privately owned, since its nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
Independence of RBI:
  • Under section 7 of the RBI Act, the central government may from time to time give such directions to the RBI as it may, after consultation with the Governor of the Bank, consider necessary in the public interest. Moreover, there is no legal act mandating the autonomy of the RBI.
  • Yet, RBI has always been looked upon as an autonomous body that has under its umbrella all commercial banks, be it PSBs or private banks, or foreign banks.
  • It is not only vested with the powers to formulate the monetary policy but also to monitor the functioning of all banks.
  • To play its role effectively, autonomy in its functioning is sine qua non for RBI.
  • However, the independence of RBI has been challenged many times due to a continued tug of war for wresting more power between the bank and the govt.
RBI’s Important Publication (half-yearly):
  • Financial Stability Report
  • Monetary Policy Report
  • Report on Financial Review
Monetary Policy Committee:
  • An amendment to RBI Act, 1934, was made in May 2016, providing the statutory basis for the implementation of the flexible inflation-targeting framework.
  • Section 45ZB of the amended RBI Act, 1934, also provides for an empowered six-member Monetary Policy Committee (MPC) to be constituted by the Central Government by notification in the Official Gazette
  • It was created in 2016.
  • It was created to bring transparency and accountability in deciding monetary policy.
  • MPC determines the policy interest rate required to achieve the inflation target.
  • The committee comprises six members and Governor RBI acts as an ex-officio chairman. Three members are from RBI and three are selected by the government.
  • The inflation target is to be set once in five years. It is set by the Government of India, in consultation with the Reserve Bank.

Read more: UPSC CURRENT AFFAIRS

Source: The Hindu