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varsha Motwani made post

Why does the RBI pay a dividend to the government?

Answer
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1 year ago


RBI is also a bank, and like all banks, it also earns interest in the funding it offers. The difference being that the profit surplus of any is given to the government as dividend.


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Gauravi Patel answered.
1 year ago


This is a very apt question considering the Reserve Bank of India (RBI) announced yesterday that it will be paying Rs 28,000 crore as interim dividend to the government. This amount is expected to help the Centre meet its revised budget estimates. The RBI was founded in 1934 and has been operating according to the Reserve Bank of India Act of 1934. According to Chapter 4, Section 47 of the Act, titled “Allocation of Surplus funds,” any profits made by the RBI from its operations are to be sent to the Centre. This mandate is specified in the following text: “After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 2 [and for all other matters for which provision is to be made by or under this Act or which] are usually provided for by bankers, the balance of the profits shall be paid to the Central Government.”