Table of Contents
- The board of the Reserve Bank of India has recommended a change in the central bank’s accounting year to April-March starting 2020-21.
- The RBI currently follows a July-June financial year
CENTRAL BOARD OF RBI
- The Reserve Bank’s affairs are governed by a central board of
- The board is appointed by the Government of India in keeping with the Reserve Bank of India Act.
- The central bank’s fiscal year 2020-21 will begin on July 1, 2020 but ends on March 31, 2021.
- Then from 2021-22 fiscal year will begin from April 1.
8-DECADE OLD TRADITION
- The RBI has followed a July-June financial year since 1940.
- Before it use to follow January-December financial year.
WHY JULY TO JUNE FINANCIAL YEAR?
- During those days in December, heavy currency outflows use to take place due to Christmas and New Years.
- Majority of the commercial banks closed their accounts on December 31. Hence if RBI wrote its report in July it would have ample opportunity to study their annual balance-
- Over time, the considerations have changed.
- Thus many recommendations have been made to align the central bank’s financial year with that of the government and the commercial sector.
HOW THE NEW SYSTEM WILL BE BENEFICIAL
- This would help align dividend payments with the government’s budgeting process.
- It would also avoid the practice of interim dividends.
- RBI would be able to provide better estimates of the projected surplus transfers to the government.
Latest Burning Issues | Free PDF
WhatsApp