Good news for Modi government as RBI may transfer Rs 2.5 lakh crore to government for…

Good news for Modi government: In a major relief for the government of India and its finances, the Reserve Bank of India (RBI) is reportedly planning to transfer a huge surplus of Rs 2.5 lakh crore or even more to the treasures of the Modi government. Notably, the RBI transferred a sum of Rs 2.1 lakh crore as surplus to the central government last year in May.

As per a report by Aaj Tak business, the RBI surplus transfer to the central government is expected to help the government bridge its fiscal gap in the recently started financial year and infuse more liquidity into the banking system. It should also be noted that the central government had initially estimated a dividend of Rs 2.2 lakh crore in its budget.

The RBI earns interest from government bonds, foreign currency investments, and loans to commercial banks. A major part of its balance sheet comprises foreign currency assets, which it trades for returns when prices rise.

Why RBI transfers surplus to Central government

The Government of India is the sole owner of Reserve Bank of India and therefore, the central bank is mandated to transfer its surplus to the government under the provisions of Section 47 of the Reserve Bank of India Act, 1934.

RBI to buy govt bonds worth Rs 40,000 crore on April 17

In another update covering the Reserve Bank of India  and the central government, the RBI announced that it will conduct an Open Market Operation (OMO) purchase of government bonds worth Rs 40,000 crore on April 17. The move aims to manage evolving liquidity conditions in the financial system, the central bank said in an official statement.

This bond purchase will be in addition to the Rs 80,000 crore worth of government securities already announced on April 1, which is being conducted in four equal tranches of Rs 20,000 crore each on April 3, 8, 22, and 29.

“In a review of current and evolving liquidity conditions, the Reserve Bank has decided to conduct an

OMO purchase auction of Central Government’s securities for an aggregate amount of Rs 40,000 crore to be held on April 17” the RBI stated. The central bank will purchase multiple government securities through a multi-security auction using the multiple price method.

(With inputs from agencies)

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