RBI Syncs Financial Year with the Fiscal Year

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News: The Reserve Bank of India (RBI) decided to will align its financial accounting year with that of the central government’s fiscal year with effect from 2020-21

Facts:

  • Fiscal year: It is used in government accounting, which varies between countries, and for budget purposes. In India, the government’s financial year runs from 1 April to 31 March.
  • The financial year of RBI: Since 1940, RBI’s accounting year/financial year is July-June
  • The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a change in its accounting year to April-March from the financial year 2020-21 on the grounds that:
  1. RBI would be able to provide better estimates of projected surplus transfers to the government for the financial year for budgeting purposes
  2. It is also expected to result in better management of the transfer of dividend or surplus to the government
  3. As governments, companies, and other institutions follow the April-March year, it will help with effective management of accounting.