RBI’s contingency fund falls to Rs 1.96 lakh crore

Mumbai: The Reserve Bank of India’s contingency fund that takes care of unforeseen emergencies has depleted to Rs 1.96 lakh crore as of June 30 after it transferred Rs 52,000 crore excess payout to the government, according to its Annual Report for FY19 released on Thursday. This week, the RBI had announ-ced the highest ever dividend transfer of Rs 1.76 lakh crore to the government. The dividend comprised  Rs 1.23 lakh crore of annual dividend for 2018-19 and Rs 52,637 crore from its surplus capital identified by a revised economic capital framework.

“After the payout to the government, the balance in the contingency fund as of June 30, 2019 was Rs 1,96,344 lakh crore compared to Rs 2,32,108 lakh crore as of June 30, 2018,” said the RBI Annual Report 2018-19. The transfer from its surplus reserves followed recommendation from a panel named by the RBI. The high-level panel, under former Governor Bimal Jalan, was formed to recommend ways to utilise the RBI’s excess cash reserves and its part transfer to the government.

The RBI said as of June 30 it “stands as a central bank with one of the highest levels of financial resilience globally”.

There are three kinds of reserves in the RBI’s balance sheet. These are: valuation reserves for dealing with volatility in foreign exchange holdings and government securities; asset development reserves for taking care of depreciation and other asset-related costs; and a contingency reserve to take care of any unforeseen emergencies.

The annual report said that the RBI computed exchange gains/losses using the weighted average cost method resulting in an impact of Rs 21,464 crore. It also said income from domestic sources increased 132.07 per cent to Rs 1,18,078 crore from Rs 50,880 crore in the previous fiscal, due to a rise in the portfolio of rupee securities, net income on interest under liquidity adjustment facility and also write back of excess risk provision from the contingency fund.

Bank frauds increase 15 per cent

The number of fraud cases reported by the banks rose 15 per cent in 2018-19 year-on-year, with the amount involved rising by 73.8 per cent, though mostly from previous cases.  More important, the average lag between the date of occurrence and its detection by banks was 22 months.

The banking sector reported 6,801 frauds in FY19, which led to a loss of Rs 71,542.93 crore versus 5,916 cases involving Rs 41,167.04 crore in FY18 said the RBI Annual Report.

The average lag for large frauds, i.e. Rs 100 crore and above, amounting to Rs 52,200 crore was 55 months.

Share of Rs 2,000 note falls, Rs 500 rises

The share of high value currency notes of Rs 2,000 in the overall currency composition has declined as the central bank continues to focus on increasing the production of Rs 500 notes, showed the data from the RBI’s Annual Report for 2018-19. The RBI is pushing Rs 500 denomination notes, which are now more than half (51 per cent ) of the total value of banknotes as at end of March 2019. This share is even higher than the pre-demonetisation level of 47.8 per cent.

As of March 31, 2019, the share of Rs 2,000 notes in terms of total value of currency in circulation fell to 31.2 percent from 37.3 per cent.