Section 47 of RBI Act : Section 47: Allocation Of Surplus Profits

Explanation using Example

Imagine that the Reserve Bank of India (RBI) has had a profitable year. Before the RBI can decide what to do with the profits, they must first account for any bad debts that are unlikely to be recovered, and any decrease in the value of their assets. They also need to set aside money for their employees' retirement funds and other standard banking provisions.

Once these obligations are met, let's say there's still a significant amount of money left over as surplus profits. According to Section 47 of the RBI Act, 1934, this remaining balance must be paid to the Central Government. This could contribute to the government's revenue and might be used for various public expenditures, such as infrastructure development, education, or healthcare.