RBI to transfer ₹2.69 lakh crore to Govt. as dividend, raises CRB to 7.5%

The Central Board of Directors of the Reserve Bank of India (RBI) on Friday, which met under the Chairmanship of Governor Sanjay Malhotra, approved the transfer of ₹2,68,590.07 crore surplus to the Union government as dividend for the accounting year 2024-25. This amount is 27% more than ₹2,10,874 crore paid as dividend in the previous year.

Based on revised Economic Capital Framework (ECF) and taking into consideration the macroeconomic assessment, the board decided to further increase the Contingent Risk Buffer (CRB) to 7.50%. 

During accounting years 2018-19 to 2021-22, owing to the then prevailing macroeconomic conditions and the onslaught of COVID-19 pandemic, the board had decided to maintain the CRB at 5.50% of the Reserve Bank’s balance sheet size to support growth and overall economic activity. The CRB was increased to 6% per cent for FY 2022-23 and to 6.50% for FY2023-24. Now, it was increased further. 

“The board reviewed the global and domestic economic scenario, including risks to the outlook. The board also discussed the working of the Reserve Bank during the year April 2024 – March 2025 and approved the Reserve Bank’s Annual Report and financial statements for the year 2024-25,” the RBI said in a statement. 

“The transferable surplus for the year (2024-25) has been arrived at on the basis of the revised ECF as approved by the Central Board in its meeting held on May 15, 2025. The revised framework stipulates that the risk provisioning under the CRB be maintained within a range of 7.50 to 4.50 per cent of the RBI’s balance sheet.” it added.

Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India said “In a prudent move, the RBI has increased the risk buffer, otherwise the dividend transfer could have topped Rs. 3.5 trillion.”

“The Union Budget for 2025-26 had projected a dividend income of Rs. 2.56 lakh crore cumulatively from the Reserve Bank and public sector financial institutions. With today’s transfer, this number would be now much higher than the budgeted estimates. We expect fiscal deficit to ease by 20 bps from the budgeted level to 4.2% of GDP,” he said.

“This surplus payout is driven by robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income. Notably, the RBI was the top seller of foreign exchange reserves in January among other Asian central banks. In September 2024, foreign exchange reserves peaked to $704 billion and the RBI sold truckloads of dollars to stabilise the currency,” he added.

Aditi Nayar, Chief Economist & Head - Research & Outreach, ICRA Ltd said, “The surplus transfer of Rs. 0.4-0.5 trillion [Rs 40,000 to Rs 50,000 crore] (equivalent to 11-14 bps of GDP), higher than the amount that was likely assumed in the FY2026 Union Budget, implies an equivalent upside to non-tax revenue, which would provide some buffer to make up for a miss in taxes or disinvestment receipts, or higher-than-budgeted expenditure in the fiscal.”                            

“Additionally, the upward revision in the FY2025 nominal GDP number suggests that despite a relatively lower growth of 9% in FY2026 vis-à-vis the budgeted levels of 10.1%, the fiscal deficit-to-GDP ratio can be contained at 4.4% in FY2026, while also accommodating a marginal fiscal slippage (to the tune of Rs. 30,000 crore). This provides some comfort on the fiscal front,” she added.

Murthy Nagarajan, Head – Fixed Income, Tata Asset Management said, “RBI dividend of Rs. 2.69 lakh is lower than market expectation of Rs 3 lakh crore. This is due to RBI revising its contingent liquidity buffer to 4.5 to 7.5%. This is a disappointment for the market, and we can expect some profit booking after the steep rally which we saw in the last 10 days.”

The board meeting was attended by Deputy Governors M. Rajeshwar Rao, T. Rabi Sankar, Swaminathan J., Dr. Poonam Gupta and other Directors of the Central Board including Ajay Seth, Secretary, Department of Economic Affairs, Nagaraju Maddirala, Secretary, Department of Financial Services, Satish K. Marathe, Revathy Iyer, Prof. Sachin Chaturvedi, Pankaj Ramanbhai Patel and Dr. Ravindra H. Dholakia.

Published - May 23, 2025 07:44 pm IST