RBI or DOB?

"The Reserve Bank of India (RBI) yesterday approved a whopping dividend of Rs 2.69 trillion for FY 25 to the Centre as against Rs 2.1 trillion in FY 24, which will help New Delhi in its push to narrow fiscal deficit to 4.4% for the fiscal year." "The Contingency Risk Buffer (CRB) was hiked to 7.50% from the previous 6.5%." "This surplus payout is driven by robust dollar sales, higher foreign exchange gains and steady increase in interest income. Notably, the RBI was the top seller of foreign exchange reserves in January." ET. "Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India." rbi.org.in. Does it mean the RBI Board owes allegiance to the government and the political party in power and not to the Indian nation? In which case its name should be changed from RBI to Department of Banking (DOB). For FY 25, the interest income of Rs 1.72 trillion is nearly offset by the CRB provision of Rs 1.63 trillion. So the profit came from the RBI sale of $396 billion and purchase of $354 billion in FY 25. "Trading income is projected at Rs 2.25-2.5 trillion," and stems "from the difference between the average buy price of Rs/US $ and the current rate in a depreciating rupee environment," wrote Dhananjay Sinha. The foreign exchange reserves "jumped by $12.588 billion to hit a fresh lifetime high of $704.885 billion for the week ended September 27." "In the week corresponding to the latest reserves data, the Indian rupee strengthened past 83.50 to the dollar, likely spurring the RBI to shore up its reserves." Mint. On 22 November 2024, the RBI sold $17.76 billion when the forex reserves dropped from $675.65 billion to $657.89 billion. in.investing.com. On the same day, the US dollar closed at 84.4302 against the Indian rupee. poundsterlinglive.com. It seems that the RBI is speculating on the foreign exchange market to increase its payout to the government. At the same time, "The RBI is expected to go for deeper interest rate cuts as part of its policy response to slower economic growth and controlled inflation, according to Morgan Stanley." "It also expected the RBI to bring down the repo rate to 5.5% with a total easing of 100 basis points." ET. "India's retail inflation eased to a six-year low of 3.16% in April from 3.34% in March, driven by a further moderation in food prices." ET. In it last meeting on 7 May, the US Federal Reserve held its Funds rate at 4.25%-4.5% (CBS) and the Fed is not likely to cut interest rates at its next two meetings in June and July, central officials said (Investopedia)." Already, "The spread between the benchmark 10-year India debt and the US has shrunk to about 173 basis points, a level last seen in 2004," and "likely risking fund outflows from local debt." Mint. If the Fed holds steady while the RBI is slashing rates the spread is going to narrow even further. At some point the Impossible Trinity (wikipedia) could come into play and matters could get really interesting. But, do we really want to live in interesting times (wikipedia)?