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The Reserve Bank of India took the decision during the Central Board of Directors’ meeting of RBI on Monday. As per the meeting’s results, the financial year for the central bank will now begin from April 1 every year.

Nevertheless, the RBI’s accounting year 2019-20 will end on June 30, 2020; the next fiscal year will begin on July 1, 2020 which will end on March 31, 2021. The decision will be implemented by the central bank from the next year i.e. from April 2021. 

With this decision of financial year calendar revision, the RBI eventually eradicated the need of an interim dividend transferring to the central government. FOI, interim dividend transfer is a practice that has been adopted in the past few years by the banks.

Since both (the RBI & the Government) abide by the T+1 system, their fiscal year spreads over two successive years. The only significant difference is that the central government’s financial year begins on 1 April (T) every year and ends on March end the next year (T+1).

The Reason Behind the Change

The Central Board of Directors of Reserve Bank of India decided to change its accounting calendar on their 582nd meeting. The major reason is believed to be the current economic condition, operations of the bank, global challenges and domestic situations. After reviewing all the challenges and various operations of the Reserve Bank of India, the board ultimately suggested aligning the financial year of RBI. 

The RBI board members also said that a proposal for the approval has also been forwarded to the government for considering the same.

While addressing the meeting, Nirmala Sitharaman (Finance Minister) expressed thoughts on the Union Budget year 2020-21, and also shared the considerable reasons behind taking such a decision.