Special Dividend From Reserve Bank Of India

BE/RBI/40/2017 dt 9.11.17

It is well known that Government has planned to induce fresh capital to the PSU Banks.  In the process, the Government has requested RBI to see the possibility of funding a part of the Rs. 2.11 lakh crore which is the amount planned to recapitalize the PSU Banks.

In this context, it is learnt that RBI has been asked if it can pay a special Dividend which is apart from the yearly surplus that RBI pays to the centre.  If this dividend is agreed by RBI,  the Government release adds that it would be used only towards bank recapitalization.  If the proposal is agreed by RBI, the pay-out is expected to be made during the current financial year of RBI which is June 2018.  However, the Central Bank will see the possibility of such payment, only after ascertaining as to whether they hold any surplus to spare.  Further,

1. For the Financial Year 2016-17, RBI had transferred Rs. 30,659 crore of surplus funds to the Government, which is less than half of the previous year (which is Rs. 65,876 crore).
2. The Government has budgeted for a dividend of Rs. 74,901 crore from RBI as also the PSU Banks, during the FY 2017-18.
3. It is learnt that RBI had an excess of Rs. 14,000 crore more in surplus from the previous financial year for provisioning.
4. Also a news item released reveals that RBI would participate in the recapilization process of PSU Banks.
5. RBI is expected to participate in the Rs. 1.35 lakh crore bond which forms a part of the recapitalization programme.
6. The first portion, of bonds is expected to be released during first week of December this year which may be for ten years tenure carrying an interest of 7% p.a. However the quantum of such bonds is yet to be decided.

CONCLUSION:

• The total commitment from the Government towards capital infiusion on PSU  will be mustered in the following manner.
• 1.35 lac crore from sale of bonds
• Balance 76,000 crore will be through budgetary allocation and funds raised from the markets.
• The recapitalization will have a great on the current budgetary allocation.

It may be recalled Government has allocated Rs. 20,000 crore towards bank recapitalization over the current and next fiscal years under INDRADHANUSH PLAN.