Home / Budget 2019 / News /  Budget 2019: Govt seeks higher dividend payout from RBI, PSBs

Mumbai: The government is expecting a higher dividend payout from the central bank and state-owned lenders to help fund a widening fiscal deficit and spur economic growth.

The government estimates it will receive 1.06 trillion ($15.5 billion) in income from the Reserve Bank of India, state-run banks and financial institutions in the fiscal year to March 2020, according to the budget presented by Finance Minister Nirmala Sitharaman on Friday. That’s higher than the 82,910 crore estimated in February’s interim budget and 74,100 crore pegged last year.

In February, the RBI approved 28,000 crore as an interim dividend to the government.

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The RBI pays dividends to the government every year, based on the profits from its investments and printing of notes and coins. The Finance Ministry has been seeking higher payouts, arguing the central bank is holding more capital than it needs. A panel led by former Governor Bimal Jalan is studying the RBI’s capital framework and is yet to finalize its report.

The pressure on the RBI was a contentious issue last year, resulting in a public standoff between then-Governor Urjit Patel and the government, which eventually led to his departure.

The Finance Ministry has estimated the central bank is holding 3.6 trillion more capital than it needs. Former Finance Minister Arun Jaitley told lawmakers last year the money could be used to recapitalize struggling state-run banks and alleviate poverty.

Budget highlights here

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