Windfall Gain For Centre as RBI Likely To Earn Massive Profits From Foreign-Currency Trading

The Reserve Bank of India (RBI is likely to make huge profit from the foreign-currency trading and lending to local banks leading to huge windfall gain for the Centre. It will be shown in the yearly dividend receipts form to be paid by the apex bank to the government.

As per the Budget, the receipts of Rs 48,000 crore in financial year 2023 will come from public sector banks and the RBI.

IDFC First Bank's India economist, Gaura Sengupta, estimates that the RBI's dividend is expected to exceed the Budget estimates due to strong dollar sales and lower provisioning requirements. She estimates the dividend could range between ₹70,000 crore and ₹80,000 crore. This better-than-expected dividend will help balance the risks faced by the government's tax revenue collections from slower-than-budgeted nominal GDP growth, according to a report published in The Economic Times.

Meanwhile, RBI had transferred a surplus of Rs 30,307 crore to the government in financial year 2022. The gains from foreign currency sales and interest on loans to local banks are likely to exceed the mark-to-market losses on bond portfolios, both local and overseas, added The Economic Times report.