Kolkata / New Delhi, May 30 (FN Bureau) Higher dividend payments might continue in FY25 also indicating adherence to fiscal glide path of 4.5 per cent by FY26. “We expect that higher dividend payments could continue in FY25 also. This is because US yields continuing at above 4 per cent will imply asset income boost for RBI as well as bolstering foreign exchange reserves through $ buying. Thus there is a large probability of RBI dividend being healthy in FY25 as well and may even be closer to Rs 2.1 trillion. It may be noted that a rate cut by Fed towards September could fuel a rally in currency against the dollar, said Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.
The RBI annual report 2023-24 has revealed that the RBI surplus evolved on unexpected lines and the annual report also shows that domestic income was flat for FY24 as expected. The sharpest increase in income was from foreign sources registering a growth of 71 percent from the level in FY23. On the expenses side, the major factor that decides the quantum of transferable surplus is the provision towards contingency funds (CF). An amount of Rs.42,819.91 crore was also provided towards CF to maintain the Available Realised Equity at the level of 6.50 percent of the size of the balance sheet. This provision towards CF was substantially lower than what was done last year. Since the transfer of surplus is dependent on meeting dual objective of maintaining contingency risk buffer between 5.5-6.5 percent and economic capital between 20.8-25.4 percent of total balance sheet, the required dual condition was comfortably met by making a provision of Rs.42,819.91 crore in CF in FY24 leading to a higher transfer of surplus in FY24. During the last three years (2021-22 to 2023-24), 72 public consultations with the stakeholders were undertaken by RBI in areas of regulation and supervision of banks and NBFCs, payment and settlement systems, financial markets, foreign exchange management and consumer protection.
The comments/ feedback received on the proposed regulatory policies are analysed in-depth, and final guidelines are issued after incorporating suitable modifications, as appropriate. The participative and consultative approach, providing around 15-60 days for the feedback, facilitates in ironing out any inconsistencies or multiple interpretations of regulations under review; identifying potential gaps between evolving market practices and underlying regulations; and formulating an objective assessment of the stakeholders’ concerns and expectations. “This clearly shows that RBI has been playing a more and more decisive approach towards making the Indian Banking system more fortified in terms of regulation and supervision,” added Ghosh. Apart from being a full-service central bank, RBI has a diverse functional mandate. RBI’s enduring concern for the quality of customer services in the Regulated Entities (REs) has led to continuing initiatives over decades, including setting up of various Committees on customer service. Over the years, RBI has put in place various institutional mechanisms aimed at improving the customer service. During the last three years (2021-22 to 2023-24), 130 customer centric measures were undertaken by RBI with 56 measures taken in 2023- 24 alone.
The number of cases on frauds reported by banks increased at a CAGR of 32.8% to 36,075 in FY24 from 8707 in FY20. However remarkably, the share of number of frauds in private banks has increased to 67.1 percent in FY24 from 35.2 percent in FY20, while PSBs share has declined significantly to 20.7 percent in FY24 from 50.7 percent in FY19, stated Ghosh. However, in terms of amount, it has declined by a CAGR of 27.9 percent to Rs 13,930 crore in FY24 from Rs 1.85 lakh crore in FY20. Again, Pvt Banks’s share increased to 22.8 per cent in FY24 from 18.4 per cent in FY20, Ghosh said. While small value card/internet frauds contributed maximum to the number of frauds reported by the private sector banks, the frauds in public sector banks were mainly in loan portfolio. The share of card/internet frauds has increased to 80.6% in FY24.