The RBI could transfer nearly Rs 1 lakh crore as surplus to the Centre because of a 69 per cent jump in income from foreign exchange transactions .

During the nine month period ended March 31, 2021, the RBI’s “exchange gain/loss” from foreign exchange transactions rose to Rs 50,629.18 crore from Rs 29,993.22 crore in the previous fiscal.

A key factor behind this large gain was the change in the accounting method: from 2018-19, the RBI has been valuing its foreign exchange transactions on the basis of a long-period weighted average cost method. Earlier, it used to value them every week, which resulted in narrow gains or losses.

The surplus transfer of Rs 99,122 crore marks a 73.5 per cent increase over the Rs 57,128 crore given last year and is the highest after 2018-19 when the RBI gave a record payout of Rs 1.75 lakh crore.

The RBI’s annual report for 2021-22 which showed the size of its balance sheet increase almost 7 per cent from Rs 53.3 lakh crore as on June 30, 2020 to Rs 57 lakh crore as on March 31, 2021.

Its earnings come from interest earned on bond holdings, purchase and sale of government securities and from its transactions in the forex market. Part of these earnings are set aside for its operational and contingency needs, while the rest is transferred to the government in the form of a dividend.

Expenditure dip

During the year, the RBI’s income decreased by 10.96 per cent, while expenditure fell even more by 72 per cent.

The RBI also transferred a lower sum to its contingency fund, a specific provision to meet unexpected and unforeseen events.

The apex bank moved Rs 20,710.12 crore to the fund against Rs 73,615 crore in the previous year, enabling it to transfer a larger sum to the Centre.