RBI Set To Pay Record Dividend of Rs 2.69 Lakh Crore Dividend To Centre

The Reserve Bank of India (RBI) has approved a record dividend of Rs 2,68,590.07 crore to the Government of India (GoI) for the financial year 2025.

Economists earlier estimated that the dividend could range between Rs 2.5 lakh crore and Rs 3.5 lakh crore, driven by robust earnings from foreign exchange operations and bond portfolio gains.

According to economists, the central bank has likely benefited from significant forex revaluation gains due to rupee depreciation and profits from its domestic bond holdings, owing to active liquidity and interest rate management.

This compares with Rs 2.1 lakh crore and Rs 87,420 crore transferred to the government in the financial year-ended March 2024 and 2023 respectively. Economists had pegged the surplus transfer to government in the range of Rs 2.5-3.5 lakh crore for the fiscal. The RBI board also revised the Economic Capital Framework. The revised framework stipulates the risk provisioning under the Contingent Risk Buffer (CRB) to be maintained within a range of "6.0 ± 1.5 per cent of the B/S size as against the existing level of 6.5 per cent, with a lower bound of 5.5 per cent".

During accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of Covid-19 pandemic, the board had decided to maintain the CRB at 5.5% of the Reserve Bank’s balance sheet size to support growth and overall economic activity, the central bank stated.

The CRB was increased to 6 per cent for fiscal 2023 and to 6.5 per cent for fiscal 2024. "Based on the revised ECF, and taking into consideration the macroeconomic assessment, the Central Board decided to further increase the CRB to 7.5," the central bank said in its press release.

The RBI’s surplus transfer is a function of valuation gains on its reserves, earnings on forex transactions, and investment earnings, apart from the issuance of currency.

The record high surplus transfer is also expected to have benefitted from the RBI's valuation gains amidst active forex intervention in a bid to stabilise the rupee.