Financial Daily from THE HINDU group of publications
Monday, Jul 12, 2004
Financial Daily from THE HINDU group of publications Monday, Jul 12, 2004 |
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Money & Banking
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RBI & Other Central Banks RBI profit may fall in 2004-05 Rukmani Vishwanth
Mumbai , July 11 THE Reserve Bank of India's profits may be lower for 2004-05 going by its budgetary estimates that indicate a lower dividend transfer to Central Government. The apex bank has indicated that the dividend payable to the Government from its surplus profits, along with those of public sector banks and financial institutions is likely to be Rs 18,875.13 crore for 2004-05, as against a dividend payment of Rs 22,080.84 crore in 2003-04. A spokesperson for RBI confirmed that the apex bank had taken a conservative estimate for the dividend payment, taking into account the reign of softer interest rates, both globally and domestically during 2003-04, that might have an impact on its profits, along with the profits of public sector banks and financial institutions. Another factor that might impact RBI's profits this year could be the lower stock of Government securities that the regulator is holding. The RBI's stock of Government securities has been eroded to a large extent due to its Open Market Operations to balance the liquidity conditions in the domestic debt market. To combat this problem, the apex bank decided to issue bonds and Treasury bills under the market stabilisation scheme in this financial year. In fact, apprehensions of a possible hardening in interest rates during the current financial year, have also raised questions about the profitability of public sector banks and financial institutions. They have been reaping the benefits of a soft interest rate regime in the domestic debt markets over the past couple of years. If their profitability is impacted, so will their contribution towards the dividend payment to the Government, said analysts.
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