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The Reserve Bank of India(RBI) might have customized its method of calculating foreign exchange gains to facilitate higher transfer of surplus, media reports recommended. The RBI transferred a record surplus of Rs 1.76 lakh crore to the government on August 26. The Higher net income from bond purchases via open market operations (OMOs) and doing away with provision requirements also helped the central bank record Supplementary gains and transfer the Surplus, the reports recommended. The Malegam panel recommended in 2013 the central bank to use the weighted average cost based assessment method instead of the existing. The Jalan committee also suggested in its recent recommendations.
The recent calculation method could have helped the RBI gain an additional Rs 21000 crore, according to Money control could not autonomously verify the story. The Government is unlikely to receive heavy dividend from the RBI next fiscal year, according to a report by Business Standard. The Based on the new ECF framework, it is likely that the RBI will have to add its available realized equity(RE) buffer with a increasing balance sheet, in the coming years. This would mean that the net income would have to be appropriated to RE first to sustain 5.5 percent of the balance sheet size, before arriving at the transferable surplus. This means the dividend transfer to the government could be less as a result. This suggest that the net income would have to be appropriated to RE first to keep up at least 5.5 percent of the balance sheet size, before inward at the transferable surplus. This means the dividend transfer to the government could be lower as a Significance Gaurav Kapur the Chief economist at IndusInd Bank
The RBI’s annual report reveals that a sharp boost in other income, on description of Change in of exchange gain/loss, has been a key explanation for the bump up income. The one time effect has added Rs21464, crore to the other income in fiscal 2018- 2019. The RBI’s core income has gone up by 44 percent, thanks to the interest earned on repo operations and increase in token due to income due to increase in portfolio of rupee securities. The Write back of about Rs 52,600 crore excess provisions from the contingency fund to transfer to the government has also boosted other income.