RBI Central Board Meeting: RBI Board Will Decide Interim Dividend, Says Shaktikanta Das
Catch all live updates on the Reserve Bank of India’s central bank meeting, held this morning.
Decision On Interim Dividend May Be Announced Today
The Reserve Bank of India may announce its decision on an interim dividend for the central government, as soon as today, according to a Bloomberg report.
The government has budgeted for Rs 28,000 crore ($4 billion) in interim payment.
In today’s media briefing, Governor Shaktikanta Das had told reporters that a decision on the issues will be taken by the RBI board independently.
Das To Meet Bank Heads On Feb. 21
Shaktikanta Das said he will meet heads of public and private sector banks later this week to discuss transmission of interest rate cut to borrowers.
Speaking to reporters after Finance Minister Arun Jaitley addressed the board of the central bank, Das said transmission of monetary policy decisions is important.
He will meet the CEOs of public and private sector banks on Feb. 21.
Earlier this month, the Reserve Bank cut the benchmark interest rate by 0.25 percent to 6.25 percent.
With inputs from PTI
'Fewer, Mega Banks'
It is important to consolidate India’s banking sector into “fewer, mega banks which are strong”, Jaitley said.
India’s public banks have already gone through two mergers. First, that between State Bank of India and its associate banks, and now a merger between Vijaya Bank, Dena Bank and Bank of Baroda.
India needs fewer and mega banks which are strong because in every sense - from borrowing rates to optimum utilization - the economies of scale as far as banking sector is concerned, are of great help.Arun Jaitley, Finance Minister
RBI To Ensure Banks Follow Rules, Says Das
When asked about the irregularities in disclosure by private lender Yes Bank Ltd., Das said that the issue is between the regulator and the regulated entity. The central bank wants to ensure that rules are followed, he added.
India’s central bank reprimanded Yes Bank for selectively revealing a “confidential” report by the regulator that led to a 30 percent surge in the lender’s shares Thursday. The regulator called the disclosure a “deliberate attempt” to mislead the public.
The risk assessment report on Yes Bank prepared by the Reserve Bank of India identified several lapses and regulatory breaches in various areas of functioning, the company said in a stock exchange filing on Friday, citing a letter from the regulator.
RBI Independently Decides Interim Dividend, Says Arun Jaitley
The Reserve Bank of India and the finance ministry discussed the government’s interim budget and the outlook of the Indian economy in today’s meeting, said Finance Minister Arun Jaitley.
No specific decision on interim dividend has been taken in my presence, Jaitley said, addressing the media with RBI Governor Shaktikanta Das.
Das clarified that a decision on the interim dividend will be taken by the RBI board, and not by the RBI Central board.
Bridging The Fiscal Gap
An interim divided from the RBI will help the government come closer to meeting its revised fiscal deficit target of 3.4 percent of GDP.
As part of its revised estimates for FY19, the government has accounted for Rs 74,140 crore in dividends from banks, financial institutions and the RBI. This is higher than the budget estimate of Rs 54,817 crore. The RBI had transferred a Rs 40,000 crore annual dividend in August.
The practice of using RBI interim dividends to balance the budget has been frowned upon by some. In a recent speech, former RBI governor YV Reddy said that such interim dividends contradict the spirit of putting in a limit on ‘ways and means advances’ which are intended to meet any short-term funding mismatch that the government faces.
Reserve Bank of India’s governor, Shaktikanta Das is set to brief the media after the central bank’s central board meeting held this morning. This is a customary meeting called by the Finance Minister every year to discuss the budget with the central bank.
While the board meeting is being attended by the Finance Minister Arun Jaitley, it is unclear whether he will be attending the media briefing as well.
According to PTI sources, the central board will discuss the interim dividend to be paid to the government during the current fiscal. The government expects Rs 28,000 crore from the RBI as interim dividend for 2018-19 based on the financial position of the central bank. Last financial year, the RBI had paid an interim dividend of Rs 10,000 crore to the centre.
The customary post-budget meeting will take place against the backdrop of a slight deviation from the fiscal deficit target for the current financial year, tax rebate for income up to Rs 5 lakh and income support scheme for 12 crore farmers.
The press conference is slated to begin at 12:30 p.m.