Union Finance Minister Arun Jaitley and RBI Governor Shaktikanta Das during the 575th Central Board Meeting of Reserve Bank of India in New Delhi. (Source: PTI)
7 years ago
Feb 18, 2019
Reserve Bank of India's governor, Shaktikanta Das is set to brief the media after the central bank's central board meeting held today morning. This is a customary meeting called by the Finance Minister every year to discuss the budget with the central bank.
Shaktikanta Das said he will meet heads of public and private sector banks later this week to discuss transmission of interest rate cut to borrowers.
Speaking to reporters after Finance Minister Arun Jaitley addressed the board of the central bank, Das said transmission of monetary policy decisions is important.
He will meet the CEOs of public and private sector banks on Feb. 21.
Earlier this month, the Reserve Bank cut the benchmark interest rate by 0.25 percent to 6.25 percent.
India needs fewer and mega banks which are strong because in every sense - from borrowing rates to optimum utilization - the economies of scale as far as banking sector is concerned, are of great help.
The Reserve Bank of India and the finance ministry discussed the government’s interim budget and the outlook of the Indian economy in today’s meeting, said Finance Minister Arun Jaitley.
No specific decision on interim dividend has been taken in my presence, Jaitley said, addressing the media with RBI Governor Shaktikanta Das.
Das clarified that a decision on the interim dividend will be taken by the RBI board, and not by the RBI Central board.
An interim divided from the RBI will help the government come closer to meeting its revised fiscal deficit target of 3.4 percent of GDP.
As part of its revised estimates for FY19, the government has accounted for Rs 74,140 crore in dividends from banks, financial institutions and the RBI. This is higher than the budget estimate of Rs 54,817 crore. The RBI had transferred a Rs 40,000 crore annual dividend in August.
The practice of using RBI interim dividends to balance the budget has been frowned upon by some. In a recent speech, former RBI governor YV Reddy said that such interim dividends contradict the spirit of putting in a limit on ‘ways and means advances’ which are intended to meet any short-term funding mismatch that the government faces.
