The Reserve Bank of India will transfer an interim dividend of Rs 28,000 crore to the Government of India, it said after a meeting of its central board on Monday. The dividend transfer is likely to help the government meet its revised fiscal deficit target of 3.4 percent of GDP for 2018-19. The decision was taken based on a “limited audit review and after applying the extant economic capital framwork,” said the RBI in a release. “It’s not a surprise for the bond market,” said Manish Wadhwana, HSBC India’s head of fixed income and global markets. “It’s on the expected lines and I really don’t expect much to change in bond markets because of this announcement on Wednesday.” The bond market will remain closed on Tuesday on account of a bank holiday.
In the case of central banks, things can change suddenly at any point of time as the income of the RBI, for instance, is heavily dependent on interest rates and exchange rates. These are not easily predictable. Though it is permissible and from an accounting standard you can draw the balance sheet for the half-year and arrive at the surplus for that half-year, the issue is whether it is a prudent thing to do.
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