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:
- RBI would be able to provide better estimates of projected surplus transfers to the government for the financial year for budgeting purposes
- It is also expected to result in better management of the transfer of dividend or surplus to the government
- As governments, companies, and other institutions follow the April-March year, it will help with effective management of accounting.
