Shakuntala Devi, well known as the human computer once said that numbers have life; they are not just symbols on paper. Similarly, numbers released by the Reserve Bank of India (RBI) on surplus capital also have hidden numbers.
The Rs 52,637 crore excess capital released by the RBI to the government indicates the larger numbers from where it was derived. The balance sheet is not yet out, but Business Today has done back of the envelop calculations by studying the surplus capital data released by the RBI yesterday. The RBI's balance sheet size or total assets seems to have grown by over 11 per cent to Rs 40.49 lakh crore in July-June 2019. Last year, the growth in the balance sheet was about 9.48 per cent to Rs 36.17 lakh crore.
As per the released data, the realized capital or the contingency fund stood at 6.8 per cent of the balance sheet. The Bimal Jalan committee has recommended the realized capital to be in the range of 6.5 per cent to 5.5 per cent of the balance sheet. The RBI board has accepted the lower band of 5.5 per cent of the balance sheet, which released some Rs 52,637 crore for the government. This actually represents the difference between the 6.8 per cent and 5.5 per cent, which has been released. This gives us a balance sheet size of Rs 40,49,000 crore.
The other curiosity is about the huge surplus income generated by the RBI in 2018-19 to pay Rs 1,23,414 crore as dividend. This is the historic high and multiple times the dividend paid by the RBI in the last decade. The dividend was around Rs 40-60,000 crore in most periods in the last decade. The reason for rise in RBI's income during 2018-19 is open market operations done to infuse liquidity into the system. In addition, RBI has also sold dollars last year to reduce volatility in the interbank foreign exchange market.
Since RBI is already in expansion mode because of an accommodative stance, its balance sheet is likely to grow further. In the post 2008 global financial meltdown period, the balance sheet of US Federal Reserve grew from less than a trillion to $5 trillion. The US Fed balance sheet is about 20 per cent of its GDP. The RBI's balance is also 20 per cent plus of the country's nominal GDP.
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