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Issue of interim dividend may come up at RBI

By January 20, 2020No Comments

Issue of interim dividend may come up at RBI board meeting.

 

  • Interim dividend may come up for discussion as the govt struggles to meet its fiscal deficit target of 3.3%
  • There would be at least one board meeting of RBI before this fiscal comes to an end, say sources.

New Delhi: The issue of interim dividend may come up for discussion in the next Reserve Bank board meeting as the government struggles to meet its ambitious fiscal deficit target of 3.3 per cent amid revenue shortfall, sources said.

Government finances have come under pressure due to moderation in revenue collection and a slew of measures taken to lift growth from over six-year-low of 4.5 per cent in the second quarter of the current fiscal.

As per the government’s estimate, the country’s GDP growth is seen dipping to an 11-year low of 5 per cent in the current fiscal as compared to 6.8 per cent in 2018-19

There would be at least one board meeting of RBI before this fiscal comes to an end, the issue of interim dividend could be raised by government nominee directors in the meeting, sources said.

However, the board meeting would be preceded by Finance Minister Nirmala Sitharaman customary address to the central board of RBI to explain vision of the Budget to be presented on February 1. This traditional exercise takes places a few days after the Budget presentation every year.

According to sources, it has been an exceptional year during which several extra-ordinary measures including slashing corporate tax rate outside Budget were announced putting government finances under stress.

If the RBI board agrees to interim dividend based on their six-month performance, it would provide some financial relief to the government, sources added.

Reserve Bank of India (RBI) follows July to June financial year.

The RBI largely earns profits through its trading of currencies and government bonds. Part of these earnings are set aside by the RBI for its operational and contingency needs while the rest is transferred to the government in the form of dividend.

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