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The <keyword id="19949639" type="General" weightage="20" keywordseo="rupee" source="keywords">rupee</keyword> appreciated by 12 paise to 83.17 against the <keyword id="19949640" type="General" weightage="20" keywordseo="US-dollar" source="keywords">US dollar</keyword> on Friday, tracking a bullish trend in domestic equities, wherein benchmark indices scaled new peaks. Forex traders attributed the rally to Rs 2.11 lakh crore record dividend by the RBI to the government for the fiscal ended March 31. It was more than double the budgeted expectation, helping shore up revenue ahead of a new government taking office. At the interbank foreign exchange market, the local unit opened at 83.26 and gained further ground to trade at 83.17 against the greenback, registering a gain of 12 paise from its previous closing level. The <keyword id="21021209" type="General" weightage="20" keywordseo="forex-market" source="keywords">forex market</keyword> was closed on Thursday on account of 'Buddha Purnima'. On Wednesday, the rupee appreciated by 2 paise to settle at 83.29 against the US dollar. After a trading holiday on Thursday, the <keyword id="20045514" type="General" weightage="20" keywordseo="Indian-rupee" source="keywords">Indian rupee</keyword> was on a strong footing following a big transfer of Rs 2.11 lakh crore in the form of dividend from the Reserve Bank of India (RBI) to the Union government, which would improve not only government finances but also allow leverage to spend more on infrastructure, said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.11, higher by 0.01 per cent. Brent crude futures, the global oil benchmark, advanced 0.05 per cent to USD 81.40 per barrel. "The overall outlook for the rupee appears strongly positive, with the Nifty 50 reaching an all-time high. These factors indicate that India remains a focal point for investors, with potential for the rupee to appreciate. "In the short term, the rupee is expected to approach levels of 83.00 to 83.10, while the medium-term target is projected to range between 82.80 and 82.50," CR Forex Advisors MD Amit Pabari said. On the domestic equity market, both the benchmark indices scaled new peaks. The 30-share BSE Sensex was trading 51.21 points, or 0.07 per cent higher at 75,469.25 points. The broader NSE Nifty breached the 23,000 level in initial trade. Moreover, the market capitalisation of listed companies on the NSE surpassed USD 5 trillion (Rs 416.57 trillion) on Thursday on a day when the Nifty 50 index touched an all-time high of 22,993.60. Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday, as they purchased shares worth Rs 4,670.95 crore, according to exchange data. SEE ALSO:<a href="https://www.businessinsider.in/tech/mobile/news/poco-f6-with-snapdraon-8s-gen-3-chipset-launched-starting-at-29999/articleshow/110367623.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/poco-f6-with-snapdraon-8s-gen-3-chipset-launched-starting-at-29999/articleshow/110367623.cms" target="_blank">Poco F6 with Snapdraon 8s Gen 3 chipset launched starting at ₹29,999</a><a href="https://www.businessinsider.in/tech/mobile/webstories/realme-gt-6t-vs-motorola-edge-50-pro-price-specs-and-features-compared/slidelist/110366047.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/webstories/realme-gt-6t-vs-motorola-edge-50-pro-price-specs-and-features-compared/slidelist/110366047.cms" target="_blank">Realme GT 6T vs Motorola Edge 50 Pro – price, specs and features compared</a><a href="https://www.businessinsider.in/sports/webstories/sunrisers-hyderabad-and-rajasthan-royals-compete-for-the-ipl-finals-spot-on-may-24/slidelist/110362880.cms" target="_blank"></a> <a href="https://www.businessinsider.in/sports/webstories/sunrisers-hyderabad-and-rajasthan-royals-compete-for-the-ipl-finals-spot-on-may-24/slidelist/110362880.cms" target="_blank">Sunrisers Hyderabad and Rajasthan Royals compete for the IPL finals spot on May 24</a>

Rupee rises 12 paise to 83.17 against US dollar in early trade

The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) is likely to transfer approximately Rs 1000 billion to the <keyword id="19900449" type="General" weightage="20" keywordseo="government" source="keywords">government</keyword> IN <keyword id="19965933" type="General" weightage="20" keywordseo="FY25" source="keywords">FY25</keyword> according to a report by Union Bank of India. The report highlights that RBI is anticipated to maintain a robust <keyword id="20047030" type="General" weightage="20" keywordseo="dividend" source="keywords">dividend</keyword> payout for the <keyword id="20093202" type="General" weightage="20" keywordseo="fiscal-year" source="keywords">fiscal year</keyword> 2025 (FY25). This projection represents a slight increase from Rs 874 billion transferred in the previous fiscal year. "The government has budgeted the FY25 dividend for RBI and PSU banks &amp; financial institutions at INR 1020bn, vis-a-vis INR 1044bn in FY24. In our view, a positive surprise is likely, similar to last year when initial budget estimate for overall dividend was only INR 480bn" said the report. Analysts in the report predict a potential positive surprise, akin to the previous fiscal year, when the initial budget estimate for dividends was significantly lower at INR 480 billion. Despite several factors influencing RBI's dividend calculation, such as <keyword id="21195402" type="General" weightage="20" keywordseo="interest-earnings" source="keywords">interest earnings</keyword> and foreign exchange (FX) gains, analysts predict a continuation of strong dividend figures. The majority of RBI's balance sheet, approximately 70 percent, consists of foreign currency assets, with another 20 per cent in domestic government bonds. Interest earnings from these securities are expected to range from Rs 1.5-1.7 trillion. Additionally, interest from liquidity operations has increased RBI's earnings, particularly as the banking system returned to a deficit mode from September 2023. While income gains of RBI from FX (Forex) sales decreased slightly due to lower sales volumes, they are expected to remain substantial despite a rise in the weighted average cost of <keyword id="20102143" type="General" weightage="20" keywordseo="reserves" source="keywords">reserves</keyword>. Moreover, a decline in provisions likely contributed to boosting RBI's dividend. Provisions for reserves, as per the Economic Capital Framework outlined by the Jalan committee, saw a rise in the contingency fund provision due to increased balance sheet growth. The impact of the RBI dividend announcement on markets may be limited in the near term, especially with ongoing elections potentially delaying government spending. However, if the surplus balance is utilized for activities like G-Sec buybacks, it could support the shorter end of the G-Sec curve. Overall, analysts maintain a positive outlook on longer-duration G-Secs due to favorable demand-supply dynamics. SEE ALSO:<a href="https://www.businessinsider.in/tech/mobile/news/indian-smartphone-market-up-8-5g-smartphones-account-for-over-70-of-shipments/articleshow/110002512.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/indian-smartphone-market-up-8-5g-smartphones-account-for-over-70-of-shipments/articleshow/110002512.cms" target="_blank">Indian smartphone market up 8%, 5G smartphones account for over 70% of shipments</a><a href="https://www.businessinsider.in/sports/webstories/ipl-decoded-highest-individual-scores-in-ipl-2024-so-far-from-stoinis-to-kohli/slidelist/110008351.cms" target="_blank"></a> <a href="https://www.businessinsider.in/sports/webstories/ipl-decoded-highest-individual-scores-in-ipl-2024-so-far-from-stoinis-to-kohli/slidelist/110008351.cms" target="_blank">IPL Decoded: Highest individual scores in IPL 2024 so far, from Stoinis to Kohli</a><a href="https://www.businessinsider.in/tech/mobile/news/apple-and-samsung-dominate-the-top-selling-smartphones-in-q1-2024/slidelist/109977094.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/apple-and-samsung-dominate-the-top-selling-smartphones-in-q1-2024/slidelist/109977094.cms" target="_blank">Apple and Samsung dominate the top-selling smartphones in Q1 2024</a>

RBI likely to transfer ₹1 trillion to government in FY25

New Delhi: The <keyword id="20072894" type="General" weightage="20" keywordseo="rural-economy" source="keywords">Rural economy</keyword> of <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> has emerged as a significant driver of <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>, outpacing urban areas largely due to increased <keyword id="20155204" type="General" weightage="20" keywordseo="government-spending" source="keywords">government spending</keyword> in the recent quarters, highlighted a report by <keyword id="20548750" type="General" weightage="100" keywordseo="Anand-Rathi" source="keywords" meta.keywordsubtype="org" meta.entityname="Anand Rathi" meta.hostid="153" meta.entityid="Anand Rathi">Anand Rathi</keyword>, a financial service company. "<keyword id="20109648" type="General" weightage="20" keywordseo="rural-india" source="keywords">Rural India</keyword> continues to outpace urban areas in growth, largely due to a significant rise in government spending in rural regions in the last quarter," said the report. For the coming months, the report stated that the growth trend in the rural economy is expected to continue, although a moderation in growth may occur. It also added that the favourable monsoon conditions and improved sowing data are anticipated to sustain the upward trajectory in <keyword id="19931574" type="General" weightage="20" keywordseo="rural-demand" source="keywords">rural demand</keyword>, providing a buffer against potential economic uncertainties. "We expect this growth to moderate following the elections, favourable monsoon conditions and improved sowing data should sustain the upward trend in rural demand". The report also highlighted that the government's ambitious capital expenditure plans, amounting to Rs 11.1 trillion, are expected to stimulate infrastructure development, further enhancing rural economic prospects The rural economy plays a crucial role in the development of the country because a majority of the population still resides in rural areas. As per the Economic Survey of 2022-2023 around 65 per cent of India's population lived in rural areas in 2021. The report also highlighted that India stands out among emerging economies due to its strong GDP growth. Last year, India grew by more than 8 per cent, and the <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="153" meta.entityid="RBI">RBI</keyword> expects a 7.2 per cent growth rate for FY25. The financial outlook is positive, with efforts to cut the fiscal deficit to 4.5 per cent. The report also noted that India's credit rating may improve because of the strong tax revenue and a large dividend from the RBI which will lead to a lower fiscal deficit than expected. "The fiscal outlook appears promising, with continued focus on reducing the fiscal deficit toward the 4.5 per cent target. Strong tax collections and a substantial RBI dividend may enable the fiscal deficit to come in lower than expected, which could potentially lead to an improved sovereign rating" said the report.

Rural economy is driving India's growth, Govt capex in infra will stimulate it: Anand Rathi report

The <keyword id="19949639" type="General" weightage="100" keywordseo="rupee" source="keywords">rupee</keyword> rallied for the fourth consecutive trading session on Friday and appreciated by 18 paise to settle at 83.11 (provisional) against the <keyword id="6368584" type="General" weightage="20" keywordseo="US-dollar" source="Orion">US dollar</keyword> on fresh foreign fund inflows and suspected intervention by the <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>. <keyword id="19950258" type="General" weightage="20" keywordseo="forex" source="keywords">Forex</keyword> traders attributed the rally to Rs 2.11 lakh crore record dividend by the RBI to the government for the fiscal ended March 31. It was more than double the budgeted expectation, helping shore up revenue ahead of a new government taking office. At the interbank <keyword id="6368276" type="General" weightage="20" keywordseo="foreign-exchange" source="Orion">foreign exchange</keyword>, the domestic unit opened at 83.26 and moved in the range of 83.03 and 83.26 against the greenback during the session. The local unit finally settled at 83.11 (provisional) against the <keyword id="19904292" type="General" weightage="20" keywordseo="dollar" source="keywords">dollar</keyword>, registering a rise of 18 paise from its previous close. In the last four trading sessions the local unit has added 39 paise against the American currency. The forex market was closed on Thursday on account of 'Buddha Purnima'. On Wednesday, the rupee appreciated by 2 paise to settle at 83.29 against the US dollar. "The <keyword id="91748" type="General" weightage="20" keywordseo="indian-rupee" source="Orion">Indian rupee</keyword> gained on suspected intervention by the Reserve Bank of India (RBI). The RBI's Rs 2.11 lakh crore dividend to the government also boosted market sentiments. "Fresh FII inflows and a decline in crude oil prices also supported the rupee. The US dollar strengthened as markets trimmed rate cut bets amid hawkish US data and hawkish Federal Open Market Committee (FOMC) meeting minutes," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.22 per cent to 104.88. Brent crude futures, the global oil benchmark, slipped 0.70 per cent to USD 80.79 per barrel. "We expect the rupee to trade with a positive bias on positive domestic equities and overall weakness in crude oil prices. However, weak global markets and strong dollar on hawkish US data may cap sharp gains," Choudhary said. Traders may take cues from durable goods orders and revised consumer sentiment data from the US. USD-INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.30, Choudhary added. On the domestic equity market front, benchmark equity indices scaled new peaks in intra-day trade before ending flat. The 30-share Sensex declined 7.65 points, or 0.01 per cent, to settle at 75,410.39 points, and Nifty fell 10.55 points, or 0.05 per cent, to close at 22,957.10 points. Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday, as they purchased shares worth Rs 4,670.95 crore, according to exchange data.

Rupee jumps 18 paise to close at 83.11 against US dollar

Mumbai, The <keyword id="50847" type="General" weightage="20" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> on Friday approved Rs 87,416 crore dividend payout to the central government for 2022-23, nearly triple of what it paid in the previous year. The dividend payout was Rs 30,307 crore for accounting year 2021-22. The decision was taken at the 602nd meeting of the Central Board of Directors of Reserve Bank of India held under the chairmanship of Governor <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword>. "The board approved the transfer of Rs 87,416 crore as surplus to the central government for accounting year 2022-23, while deciding to keep the Contingency Risk Buffer at 6 per cent," <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword> said in a statement. The board also reviewed the global and domestic economic situation and associated challenges, including the impact of current global geopolitical developments. The board also discussed the working of RBI during 2022-23 and approved the annual report and accounts of the central bank for the year. Madan Sabnavis, chief economist of Bank of Baroda said that this surplus transfer will come in very handy and ensure that the government managed it fiscal numbers with relative ease given that there are question marks on the divestment programme. "The Budget had looked at a number of Rs 48,000 crore as dividend from banks and RBI. RBI has overshot this number with the transfer of Rs 87,000 cr. This was enabled by higher earnings on sale of forex during the year, better returns on forex investments in US treasuries (though value of bonds would have fallen which has to be charged to the contingency reserve), revaluation of forex assets and adjustments in reserves as per the Bimal Jalan Committee recommendations. The RBI would have had higher pay-outs due to the higher SDF rates with the system being in surplus all through the year," Sabnavis said. According to him, public sector banks have also reported very good profits and announced dividend, there will be higher flows of dividends from this source too. Add to this the possible higher dividend payments by the oil marketing companies and the situation appears quite comfortable from a market perspective as this will not lead to higher market borrowings. (With inputs from PTI)

RBI approves Rs 87,416 cr dividend payout to the government for 2022-23

The <keyword id="6354335" type="General" weightage="80" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> on Friday said its Board approved the transfer of Rs 30,307 crore surplus as dividend to the Centre for the accounting year FY22. It decided to maintain the contingency risk buffer at 5.50 per cent. As per a framework, the <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> has to maintain a contingency risk buffer of 5.5-6.5 per cent of its balance sheet. The 596th meeting of the Central Board of Directors of <keyword id="50847" type="General" weightage="80" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> of India was held on Friday at <keyword id="6358070" type="General" weightage="20" keywordseo="mumbai" source="Orion">Mumbai</keyword> under the Chairmanship of Governor Shaktikanta Das, and reviewed the current economic situation, global and domestic challenges and the impact of recent geopolitical developments. It also discussed the working of the central bank during the year April 2021-March 2022 and approved the <keyword id="3608734" type="General" weightage="20" keywordseo="annual-report" source="Orion">Annual Report</keyword> and accounts of the Reserve Bank for the accounting year 2021-22. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/markets/news/equity-indices-start-positive-in-opening-trade-sensex-up-by-1105-points/articleshow/91681412.cms">Equity indices start positive in opening trade; Sensex up by 1,105 points</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/canada-to-ban-chinas-huawei-technologies-from-5g-networks/articleshow/91687584.cms">Canada to ban China’s Huawei Technologies from 5G networks</a>

Reserve Bank to pay ₹30,307 crore dividend payment to Centre for FY22

<ul><li>In the last financial year (FY23), <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> increased its gold holdings, shows its annual report. This even as gold imports dropped by 24% in the same period.</li><li>This increase in value is due to an addition of 28.94 metric tonnes of gold by the RBI and also due to the rupee depreciating vis-à-vis the US dollar.</li><li>RBI’s higher income from investments helped it pay 2.5x higher dividends to the <keyword id="6377129" type="General" weightage="80" keywordseo="government-of-india" source="Orion">Government of India</keyword>.</li></ul>Higher prices may have curbed gold imports but a closer look at the Reserve Bank of India’s annual report shows that India’s central bank increased its bullion holdings in the financial year gone by. As import of the precious yellow metal declined 24.2% to 35 tonnes as on 31 March 2023, the total gold held by the Reserve Bank weighed at 794.63 metric tonnes as compared to 760.42 metric tonnes it held in the previous year. In other words, India’s central bank bought an additional 34.21 metric tonnes of gold during the year. According to the RBI’s annual report, of the 794.63 metric tonnes it held on 31 March 2023, 301.09 metric tonnes of gold was held as backing for currency notes it issued. In the comparative period last year, it held 295.82 metric tonnes of gold against currency notes. In March 2023, the RBI held 493.54 metric tonnes of gold as asset of Banking Department. In the previous financial year, the RBI held 464.60 metric tonnes as assets. The value of gold (including gold deposit) held as an asset by the central bank’s Banking Department increased by 17.20% from Rs 1,96,864.38 crore as on March 31, 2022 to Rs 2,30,733.95 crore as on March 31, 2023. This increase was on account of addition of 28.94 metric tonnes of gold and also due to increase in the price of gold and depreciation of INR vis-à-vis US dollar. <cmsannotation type="cmsannotation" annotationid="Balance sheet impact" comment="subhead" text="Balance sheet impact">Balance sheet impact</cmsannotation> The rise in RBI’s gold holdings and increase in the value of gold also expanded its balance sheet in the financial year 2022-23. According to the central bank’s annual report, the size of the balance sheet increased by Rs 1,54,453.97 crore ( +2.50%) from Rs 61,90,302.27 crore in March 2022 to Rs 63,44,756.24 crore on 31 March 2023. The increase on the asset side was due to a rise in foreign investments, gold, and loans and advances by 2.31 per cent, 15.30 per cent and 38.33 per cent, respectively. According to analysts, the bumper income from forex sales and higher interest income on its holdings of domestic and foreign securities has helped the RBI to pay a higher than expected dividend to the Government of India. According to Nomura, “The RBI’s annual report released today unpacks the dynamics behind the higher-than-expected dividends transferred to the government of INR874bn (~0.3% of GDP) versus ~INR350bn pencilled in the FY24 budget.” According to the Japanese investment bank, the sharp increase in the RBI’s income comes from profits from its FX sales (INR1.0trn), reflecting its active FX intervention. In addition, higher interest income (INR1.3trn) on its holdings of domestic and foreign securities has more than offset losses on its liquidity operations. It has been reported earlier that the central bank was expected to pay the Government of India dividend to the tune of Rs 95,000 crore, which is 2.5 times higher than the Budget estimates. Economists are of the view that this windfall gains may not protect the fiscal deficit from slipping beyond 5.9% of GDP. Nomura’s economists are of the view that the fiscal dynamics have a lot of moving parts – with a potential undershoot of nominal GDP growth, lower tax buoyancy, an overly tight budget for revex and ambitious capex targets. “As such, the risk to the FY24 fiscal deficit target of 5.9% of GDP is still towards slippage.”

RBI’s gold holdings jump over 17% to a whopping ₹2,30,734 crore

<keyword id="495625" type="General" weightage="20" keywordseo="Indias-foreign-exchange-reserves" source="Orion">India's foreign exchange reserves</keyword> fell by $2.164 billion to $584.248 billion for the week ending April 21, according to data released by the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) on Friday. In the previous reporting week, the overall kitty had risen by $1.657 billion to $586.412 billion. Incidentally in October 2021, the country's forex reserves had reached an all-time high of $645 billion. In the period under review, the reserves fell mainly due to <keyword id="6499383" type="General" weightage="20" keywordseo="foreign-currency-assets" source="Orion">foreign currency assets</keyword> (FCAs) shrinking by $2.146 billion to $514.489 billion. The reserves have been declining as the RBI has used the funds to defend the rupee amid pressures caused mainly by global developments. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/ultratech-cements-q4-net-profit-falls-32-to-1666-crore-declares-dividend/articleshow/99848912.cms">UltraTech Cement’s Q4 net profit falls 32% to ₹1,666 crore, declares dividend</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/upcoming-new-cars-and-suvs-in-india-in-may-2023/slidelist/99842426.cms">Upcoming cars expected to launch in India in May 2023</a>

India's foreign exchange reserves fall to $584.24 billion

<ul><li>RBI is giving the government 67% less money than it did last year</li><li>The government is already pumping money out to address the fallout of the coronavirus pandemic.</li><li>The lacklustre amount is unlikely to be enough to address the government’s budgetary concerns.</li></ul>The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) has doled out half a billion rupees as surplus to the Indian government but it won’t be nearly enough to bridge the <keyword id="1000311" type="PERSON" weightage="20" keywordseo="budget-gap">budget gap</keyword>. This year’s annual payout from the RBI to the Indian government was a lacklustre ₹57,128 crore ($7.62 trillion). The payment is only one-third of what RBI shelled out last year. <div type="image" title="RBI annual allocation" msid="77546468" hostid="261" caption="&amp;lt;p&amp;gt;RBI&amp;#39;s annual allocation over the past five years&amp;lt;/p&amp;gt;"></div> In 2019, the RBI allocated a record ₹1,76,000 crore ($23.5 billion), which was mostly made up of the dividend payout — only ₹52,640 crore was surplus capital. <div type="image" title="snapshot-1597408467844" msid="77546493" hostid="261" caption="&amp;lt;p&amp;gt;Division of last year&amp;#39;s annual allocation by the RBI&amp;lt;/p&amp;gt;"></div> India’s central bank hit the lower end of expectations with analysts forecasting this year’s allocation to be anything from <a href="https://theprint.in/economy/modi-govt-awaits-rbi-dividend-but-it-wont-help-plug-revenue-hole-created-by-covid/481350/">₹40,000 crore to ₹ 1,00,000 crore. </a>One of the factors that dictated the low payout is that 5.5% has been set aside as a ‘contingency risk buffer’. The government was hoping for more capital to bridge the budgetary gap caused by the coronavirus pandemic. This includes lower tax realisation, higher expenditure on healthcare and overall disruption to pre-COVID activities. The RBI, on the other hand, is falling short of its revenue projections with the Indian economy poised to contract for the full year in more than four decades. Not that the surplus capital is unlikely to help with the government’s needs, some of the other options it has on hand are withdrawing more cash out of the central bank, selling state assets or increasing borrowing — something that’s already at a record high. The fiscal deficit was already at ₹4.66 lakh crore — or 58.6% of the budget estimate — within the first two months of the current financial year.

RBI’s annual surplus to the government this year is only one-third of what it was last year

<ul><li>The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> has proposed 15% capital adequacy as a benchmark and LIC Housing Finance is short of that.</li><li>The new restrictions proposed by the regulator will also limit the amount of dividend paid by other non-banking finance companies.</li><li>Check out the latest news and updates on <a href="https://www.businessinsider.in/" data-type="tilCustomLink" target="_blank">Business Insider</a>. </li></ul>The Reserve Bank of India issued a draft circular that proposed restrictions on non-banking finance companies declaring dividends. And, according to analysis by Emkay, only two companies, LIC Housing Finance and M&amp;M Financial Services, in that space do not meet the conditions, under current circumstances, for paying dividends set by the central bank. However, M&amp;M Finance has clarified that it would be eligible. Not surprisingly, it took a toll on the two stocks. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Stock </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Losses on Dec 10 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">LIC Housing Finance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-3.11% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mahindra and Mahindra Financial Services </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-3.35% </td></tr></tbody></table> The RBI has proposed a capital to risk weighted assets ratio (CRAR) of 15%. Simply put, CRAR is a measure of how much capital the company has compared to the riskiness of its loans. If the borrower fails to repay, the capital would be the cushion to absorb the loss. And LIC Housing Finance fails to meet the RBI threshold on this count. The capital adequacy ratio has been 14.4%% for the company in the last two financial years and 14.5% for the first half of the current one, the report said. The way out of this is that the company can raise money from the market to boost this figure past the 15% mark, and then, shareholders can expect a dividend. M&amp;M Financial, on the other hand, doesn’t make the cut on RBI’s benchmark for paying dividend because the amount of bad loans on its books is a little more than what the regulator likes. The circular has set the threshold at 4% while M&amp;M Financial has a net NPA (non-performing assets) of 4.7%. However, if the firm is able to recover enough loans by March 2021 to bring the metric below 4%, dividend may be back on the table. In the year before COVID-struck, the one ending in March 2019, the company paid a handsome 25.7% dividend to shareholders. On the other hand, in a statement to Business Insider, M&amp;M Financial stated “As per the circular, RBI has proposed a twin matrix of CRAR and NNPA and accordingly specified 4 categories based on a combination of both. CRAR of MMFSL has been above 18% for the last 3 years. Hence, the company will fall in Category B as per the matrix. Secondly, MMFSL’s net NPA at the end of September 30 was 4.7%, based on which our permissible dividend payout ratio is ‘up to 20%’,” the company said. This is not the first time the spotlight has fallen on M&amp;M Finance’s chunk of bad loans. The pandemic has only increased the risk of defaults and therefore the company too has been aggressively setting aside money to cover the losses if they occur. “As we progress, the next six months, which is normally the good six months, we would not see a decline in the gross NPA, and we will maintain our stance on aggressive provisions… if we start seeing things are not improving as we think, then we may take higher provision, whichever is necessary,” Vice Chairman and Managing Director Ramesh Iyer told Business Insider <a href="https://www.businessinsider.in/stock-market/news/mahindra-and-mahindra-finance-managing-director-gets-candid-about-the-rights-issue/articleshow/77212386.cms" data-type="tilCustomLink" target="_blank">in an exclusive chat in July 2020</a>. Here’s an excerpt of that interview: <div type="Youtube" id="Qu9KvcNr1iM" title="M&amp;M Financial MD explains how the company is preparing for the worst and hoping for the best" thumbUrl="https://i.ytimg.com/vi/Qu9KvcNr1iM/mqdefault.jpg"></div> For other NBFCs that are eligible to pay dividend, there may be a cap on how much they can dole out based on the benchmarks set by the RBI. These are the likely limits on dividends given the current financial health of the following firms. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dividend limit </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bajaj Finance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 45% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Cholamandalam Finance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 45% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">L&amp;T Finance Holdings </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 25 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Magma Fincorp </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 25% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Shriram City Union Finance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 25% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Shriram Transport Finance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to 25% </td></tr></tbody></table>Source: Emkay SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/the-33-billion-itc-one-of-indias-most-trolled-stock-in-recent-weeks-seems-to-have-turned-a-corner/articleshow/79641456.cms">The $33 billion ITC, one of India’s most-trolled stock in recent weeks, seems to have turned a corner</a><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/the-33-billion-itc-one-of-indias-most-trolled-stock-in-recent-weeks-seems-to-have-turned-a-corner/articleshow/79641456.cms"></a> <a target="_blank" class="c-link c-message_attachment__title_link" 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How RBI's proposed restrictions may affect your dividends

Mumbai, Apr 17 () The Reserve Bank on Friday debarred all commercial and cooperative banks from paying dividends to shareholders and promoter groups as the regulator fears the Covid-driven economic shocks would continue longer and may put the health of the financial system at risk. The decision will hit the already scuppered finances of the Centre, given the massive shocks to the economy from the coronavirus-driven lockdown and the already falling growth rates which has brought down demand for loans and thus the profitability of banks which were anyways grappling with high bad loans. "It is imperative that banks conserve capital to retain their capacity to support the economy and absorb losses in an environment of heightened uncertainty. "In this regard in view of the Covid-19-related economic shocks, commercial banks and cooperative banks shall not make any further dividend payouts from the profit pertaining to FY20 until further instructions," RBI Governor Shaktikanta Das said while announcing a slew of liquidity enhancing measures to prop up the economy. "This restriction shall be reviewed on the basis of the financial position of banks as of the September 2020 quarter," he added. Avnish Jain of Canara Robeco AMC said "stopping dividend payments from banks would be impact government's non-tax revenue, further worsening the already stressed fiscal situation." While most private sector banks pay only very low dividends, state-run banks have to make hefty payouts to the government annually. In fact, since 2018 the government has made it mandatory for all its profit making companies to pay at least 20 percent of their net income as dividend. Budget 2020 has shifted the dividend distribution tax from the hands of the company to the shareholder/investor, thus appeasing the promoters. The Covid-19 pandemic has wreaked havoc on economies across the world and has taken the lives of over 1.45 lakh globally, including around 440 in India. The virus that began in mid-November 2019 in China has infected over 2.1 million globally including around 13,387 in the country. BEN ABMABM

RBI bans banks, cooperatives from paying dividends

The size of <keyword id="102024" type="General" weightage="20" keywordseo="the-reserve-bank-of-india" source="Orion">the Reserve Bank of India</keyword>'s (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) balance sheet increased by 8.46 per cent as on March 31, 2022, mainly reflecting its liquidity and foreign exchange operations during the entire fiscal year. While income for the year increased by 20.14 per cent, expenditure increased by 280.13 per cent, according to the RBI's Annual Report for 2021-22 released on Friday. The increase on the asset side was due to increase in foreign investments, domestic investments, gold, and loans and advances and on the liability side due to the increase in deposits and notes by it. FY22 was the first full year of the April-March accounting cycle after transition from July-June. It shifted to a new accounting year in FY21 which was for nine months ended March 2021. The year 2021-22 ended with an overall surplus of Rs 30,307.45 crore as against Rs 99,122 crore in the previous year, resulting in its decrease of 69.42 per cent, the report cited. Earlier this month, the RBI said its Board approved the transfer of Rs 30,307 crore surplus as dividend to the Centre for the accounting year FY22, besides deciding to maintain the contingency risk buffer at 5.50 per cent. As per a framework, the RBI has to maintain a contingency risk buffer of 5.5-6.5 per cent of its balance sheet. Further, the report said the supply of notes during the year 2021-22 was at 222,505 lakh pieces, 0.36 per cent lower than that of the year 2020-21. The expenditure incurred on printing of bank notes increased from Rs 4,012.09 crore in 2020-21 to Rs 4,984.80 crore in 2021-22. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/environment/news/why-assam-gets-flooded-every-year/articleshow/91828506.cms">Explained: Why Assam gets flooded every year</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/thelife/personalities/news/gautam-adani-a-story-on-how-to-generate-wealth-via-hope-fomo-and-of-course-debt/articleshow/91829090.cms">Understanding Gautam Adani’s rise: a story on how to generate wealth via hope, equity and of course debt</a>

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