Currently a news is being circulated that RBI has adopted its Financial year end as 30.06.2020 instead of 31.03.2020 for Fiscal year 2019-20. Actually this news was announced in February.
With regard to above news we would like to bring to the notice that RBI was always following July-June Financial year and now it has decided to bring its Financial year in line with other businesses and hence it was announced that from next year RBI shall shift to April-March Financial year.
Therefore the news that this year RBI is going to end it’s Fiscal in June due to corona virus is fake. The History of same is as follows:
“When it commenced operations on April 1, 1935, with Sir Osborne Smith as its first Governor, the RBI followed a January-December accounting year. On March 11, 1940, however, the bank changed its accounting year to July-June. Now, after nearly eight decades, the RBI is making another switch: the next accounting year will be a nine-month period from July 2020 to March 31, 2021 and thereafter, all financial years will start from April, as it happens with the central and state governments.”
But why is the system being changed?
The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a more transparent presentation of the RBI’s annual accounts, and a change in its accounting year to April-March from the financial year 2020-21. It said the RBI would be able to provide better estimates of projected surplus transfers to the government for the financial year for budgeting purposes.
It is also expected to result in better management of transfer of dividend or surplus to the government. Moreover, as governments, companies, and other institutions follow the April-March year, it will help with effective management of accounting. In May 2018, when Urjit Patel was Governor, the RBI appointed its first ever Chief Financial Officer (CFO), Sudha Balakrishnan.
Many people are even speculating that accounting year for everyone is going to end on 30.06.2020 due to Corona virus issue but no such thing is going to happen Accounting year or financial year will normally end on 31.03.2020 for everyone else.
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