India, June 4 -- The RBI is recalibrating its provisioning norms to sustain high payouts, raising concerns about its long-term financial prudence and independence. Is the central bank slowly turning into a fiscal backstop for the Government?

For the financial year (FY) 2023-24, the Reserve Bank of India (RBI) Board approved a record dividend transfer of Rs 210,000 crore to the central Government. This was reflected in the accounts of the latter for the FY 2024-25. This amount was 2.4 times the dividend transfer of about Rs 87,400 crore made by the RBI for FY 2022-23 and available for use by the Centre during FY 2023-24.

Even when compared to the provision of about Rs 80,000 crore made by Sitharaman in the interim budget for FY 2024-25, ...