This is refers to the report “RBI surplus profit dips 20%” (August 12). It is taken from the Bank’s press release. “Surplus profit” is a misnomer. Apart from the fact that “surplus” is redundant in the expression, the Bank’s balance sheet refers to the transaction only as a “transfer of surplus to the government”. It also refers to net income, not profit. The term profit is seen only in the context of the sales of shares and securities. It was used by the Bank for its transfer to the government in the past but was given up since it gave a commercial flavour to the activities of the central bank, which manufactures money. Now, much of its earnings are derived from foreign assets. But for a long time the income came from domestic assets mainly due to the monetising of the government debt raising money supply to high levels resulting in inflation. Under such circumstances profits were as undesirable as losses.
A Seshan, Mumbai
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