RBI's balance sheet rises 6.99% for nine months to March 2021

The size of the Reserve Bank's balance sheet, which is reflective of activities carried out by it in pursuance of currency issue function as well as monetary policy and reserve management, has increased by 6.99 per cent during the nine-month period ended March 31, 2021.

While income for the year decreased by 10.96 per cent, the expenditure decreased by 63.10 per cent, as per the RBI's Annual Report for 2020-21.

The year ended with an overall surplus of Rs 99,122 crore as against Rs 57,127.53 crore in the previous year, representing an increase of 73.51 per cent, it added.

On account of transition to April-March accounting year from July-June accounting period, the RBI has come out with data for nine months for 2020-21 as compared to twelve months for the previous year.

Earlier this month, the Central Board of Directors of RBI had approved transfer of Rs 99,122 crore surplus to the central government.

"The size of the balance sheet increased by Rs 3,72,876.43 crore, i.e., 6.99 per cent from Rs 53,34,792.70 crore as on June 30, 2020 to Rs 57,07,669.13 crore as on March 31, 2021.

"The increase on the asset side was mainly due to increase in foreign and domestic investments by 11.48 per cent and 13.75 per cent, respectively," the report said.

On the liability side, the increase was due to increase in deposits, notes issued and other liabilities.

Domestic assets constituted 26.42 per cent, while the foreign currency assets and gold (including gold deposit and gold held in India) constituted 73.58 per cent of total assets as on March 31, 2021 as against 28.75 per cent and 71.25 per cent, respectively, as on June 30, 2020.

As on March 31, 2021, the Reserve Bank held 695.31 metric tonnes of gold as compared to 661.41 metric tonnes as on June 30, 2020.

The increase is on account of addition of 33.90 metric tonnes of gold during the year, the report said.

It further said of the 695.31 metric tonnes as on March 31, 2021, 292.30 metric tonnes is held as backing for notes issued and shown separately as an asset of Issue Department.

The balance 403.01 metric tonnes as on March 31, 2021 as compared to 369.11 metric tonnes on June 30, 2020 is treated as an asset of Banking Department.

The value of gold held as asset of Banking Department increased by 0.50 per cent from Rs 142,874.67 crore as on June 30, 2020 to Rs 143,582.87 crore as on March 31, 2021, on account of addition of 33.90 metric tonnes of gold during the year.

Income for the nine months was no doubt less but the expenditure contracted sharply due to significant reduction provision towards Contingency Fund (CF), leading to a higher available surplus.

The Contingency Fund provision was required as the available realised equity on March'21 base had fallen to 5 per cent of the total assets.

"Thus as per recommendations of the Jalan Committee, the above provision was made to keep it at a level of 5.39 per cent, same as on the previous valuation date.

"Further since realized equity plus the reserves is within 20-25.5 per cent of the total assets it implies entire surplus of Rs 99,122 crore was transferred," according to SBI Ecowarp report.

Photograph: Francis Mscarenhas/Reuters