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MUMBAI: Reading between the lines, the two statements - Reserve Bank’s liabilities and assets, and Reserve Money -in the recent issues of the Reserve Bank of India’s (RBI) weekly supplement, it appears that the central bank may report excellent results for the year ending June 30, 2007.

Broad brush calculations indicate that its surplus may be in the vicinity of Rs 45,700 crore. This includes Rs 35,531 crore realised from the sale of the equity stake in the State Bank of India to the Centre on June 29 - an amount that will be back into government’s coffers in August after the RBI accounts are audited and approved by the board of directors.

But, even after this extraordinary transaction is ignored, RBI is likely to reap a profit which may approximate to Rs 10,000 crore compared with Rs 8,404 crore in 2005-06.

The Reserve Bank of India closes its accounts on June 30 whereas the data in the weekly supplement pertain to June 29, 2007, as the statistics is collected, compiled and published with Fridays as the reference points.

Thus, for 2006-07, information is left out for one day in this publication. This implies that the finer details of its surplus may differ from what is inferred in the supplement and this difference may run into crores of rupees.

As such, the projected figure of profits is only indicative of its magnitude.

However, the estimate is unlikely to be wide off the mark. The Union budget for 2007-08 had provided for Rs 12,023 crore by way of receipts from RBI surplus/dividends from nationalised banks and financial institutions.

Since, under this head, it is the central bank which contributes a lion’s share, it is a safe bet that RBI will live up to this role this fiscal as well, as its profits have swelled by around Rs 1,600 crore.

The interesting question is, why RBI gets nothing from the sale of its almost 60% equity stake in the State Bank of India?

This accounting legerdemain requires an explanation as also the rationale underlying its relinquishing of ownership of SBI.

To take up the second issue first, a decade ago, the Narasimham Committee II had underscored the fact, that RBI as the regulator and supervisor of the banking system, should not own the State Bank of India.

In its credit and monetary policy pronouncement for 2001-02, the RBI reiterated its acceptance of this stance but the required policy and legislative moves did not see the light of day till this year.

In the budget speech for 2007-08, the finance minister had averred that the “government proposes to acquire RBI’s equity holding in the State Bank of India” and made a provision of Rs 40,000 crore to this end.

But it was only when the Central bank’s accounting year was at its fag end, did things speed up. An ordinance was promulgated on June 21 and the sale date was fixed for June 29, the penultimate day of RBI’s closing of accounts for 2006-07. The buy-out value was based on the SEBI-specified pricing formula.

The long-delay is difficult to fathom. Even after the budget for the current fiscal has spelt out the government’s intention, why this last-minute rush when no obstacles stood in the way.

The whole transaction is painless. The budget has provided an outgo of Rs 40,000 crore - the actual cost is less by about Rs 4,500 crore - as Demand No 33 under the head, Payments to Financial Institutions and figures under the item, Investments in general, financial and trading institutions. This figure is described as the acquisition cost of RBI stake in SBI.

But, the budget also has accounted for a capital receipt of Rs 40,000 crore as “one-time receipt from RBI proceeds from transfer of its stake in SBI to government”.

Thus, the whole deal has no impact on the Union finances. RBI also gains nothing even though it has divested its equity holding in India’s largest bank.

In effect, the government stands to get only the surplus of the Reserve Bank from its operations during 2006-07. But, with a handsome Rs 10,000 crore or so, the central bank has turned out to be a dependable revenue prop to the Centre.