RBI`s dividend transfer to reduce ongoing pressure on banking system deposit accretion: Ind-Ra
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A few days after the RBI approving the transfer of Rs 2,10,874 crore as surplus to the government for the accounting year 2023-24, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the expected mammoth dividend transfer by the Reserve Bank of India (RBI) to the central government and subsequent spending by the latter, is likely to reduce the ongoing pressure on the banking system deposit accretion and overall rates in the system.
According to the report, the mega dividend will give a fillip to central government’s fiscal position, which may lead to additional spending or fiscal consolidation or a combination of both. However, the agency noted that the structural challenges for banks in term of deposit accretion will continue in the medium to long term.
Meanwhile, the transfer of Rs 2,10,874 crore as surplus to the government for the accounting year 2023-24 is more than double of what was budgeted expectation, helping shore up revenue ahead of a new government taking office. The government had budgeted a receipt of Rs 1.02 lakh crore as dividends from the RBI, public sector banks and financial institutions in the interim budget for the fiscal year 2024-25 (April 2024 to March 2025) presented in February this year.
