RBI To Transfer 50,000cr Surplus To The Central Government
The Reserve Bank's income comprises of earnings from foreign and domestic sources, with the major portion being contributed by interest receipts, complemented by relatively small amounts of income from discount, exchange, commission, etc.
The Reserve Bank of India (RBI) on Wednesday said that it will transfer Rs 50,000 crore as surplus to the central government for the year ended June 30, 2018.
The Central Bank which follows the July-June year had transferred Rs 30,659 crore to the government’s coffers for the year ended June 30, 2017.
According to RBI, the decision to transfer the surplus was taken by its Central Board which met here on Wednesday.
The Reserve Bank’s income comprises of earnings from foreign and domestic sources, with the major portion being contributed by interest receipts, complemented by relatively small amounts of income from discount, exchange, commission, etc.
The Reserve Bank of India (RBI) is currently working with other financial sector regulators like Sebi, PFRDA and Irda to develop an interest rate market where mutual funds, pension and insurance funds could participate in securities lending to deepen market based finance and develop an alternate to bank finance.
“IRDA, SEBI and PFRDA too could help development of interest rate markets. For instance, short selling activity could benefit if a wider pool of securities lenders can be developed.
“Insurance and pension funds, mutual funds have significant holdings of Government securities that could be used to lent to short sellers. This would avoid short-squeeze incident we saw a couple of years back, apart from generating income for these entities.
“We are working with regulators to develop a securities lending product that could enable these entities to participate in securities lending,” B.P. Kanungo, Deputy Governor, Reserve Bank of India recently said at FIMMDA meeting in Moscow.
FIMMDA is a representative body of participants in the fixed income market in India.
He said the Indian financial sector which mostly has been a bank-based one needs to develop a robust fixed income market to bring in market discipline, to augment bank finance and indeed free up bank finance for uses that cannot access the market directly.
Development of the fixed income market has been an important objective of the Reserve Bank, the Government, the SEBI and other regulators these many years. Significant progress has been made, yet a lot remains to be achieved.
The Banking regulator is also currently looking at refurbishing some regulations on treatment of cash margins as deposits, payment of interest on such margins, posting of collateral abroad to enable participants to move to global margining standards.
“The risk management at market level is pretty robust, with central counterparty settlement, exchange traded products, trade repositories, legal entity identifier.
But there is scope of improvement at entity-level as far as financial institutions are concerned, which will be tested with introduction of new accounting standards. Some other aspects of regulation – treatment of cash margins as deposits, payment of interest on such margins, posting of collateral abroad – are all under examination to enable participants to move to global margining standards.
Kanungo further said in the next five years the demand for bonds will significantly outstrip the supply.
“It is estimated that five years down the line, the demand for bonds will significantly outstrip the supply,” he said. (IANS)