Press Information Bureau

Government of India

Ministry of Finance

11-May-2012 17:44 IST

Auction of Government Cash Surplus

As per existing arrangements and agreement signed between Government of India and Reserve Bank of India (RBI), any excess balance in cash over the requisite minimum cash balance, up to a maximum extent of Rs. 50,000 crore could be invested by the RBI on behalf of Government in the securities held by them in their portfolio. Any cash surplus over and above the limit of Rs.50,000 crore remains idle with the RBI. The investment limit is fixed from time to time by RBI in consultation with the Government. Due to increase in size of Government expenditure over the years, it has been felt that the maximum limit of investment of Rs.50,000 crore may be revised so that any surplus funds over the limit could also be invested meaningfully to reduce net expenditure on interest payment.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

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DSM/SS/Hb

Investment limit for government cash surplus may be revised to allow broader RBI investment and reduce interest burden. The existing arrangement permits the RBI, in consultation with the Government, to invest Government cash surpluses up to a fixed maximum in securities from the RBI's portfolio, while any surplus above that ceiling remains idle; authorities propose revising the investment limit to enable broader RBI investment of surplus funds to reduce the Government's net interest payments.