RBI's Rs 2.69 lakh crore dividend may not impress markets in the short term. Here's why
[hfe_template id='11223']
[ad_1]
The Reserve Bank of India (RBI) has announced a record-breaking Rs 2.69 lakh crore dividend to be given to the central government for the financial year 2024-25. This is a big jump of 27% compared to the Rs 2.11 lakh crore dividend given last year. However, some experts had expected the number to be even higher -- close to Rs 3 lakh crore. This dividend decision was taken at the RBI’s board meeting held on Friday. The RBI also approved its annual financial report for the year. The dividend amount is decided based on a revised policy called the Economic Capital Framework (ECF). Under this new framework, RBI has increased its contingency reserve — a kind of emergency fund— from the earlier 5.5–6.5% range to a higher 6–7.5% range. Because of this higher reserve, the final dividend turned out to be smaller than what the markets were hoping for. Murthy Nagarajan, Head of Fixed Income at Tata Asset Management, said the lower-than-expected divid...