The Business Factors News Desk
Mumbai, May 23, 2025: The Reserve Bank of India's (RBI) Central Board has approved the transfer of Rs 2.69 lakh crores as surplus to the government for the financial year 2024-25, the RBI said in a statement on May 23. This figure is higher than the transfer for FY24, though lower than some of the market estimates for FY25.
This is likely the highest ever annual surplus transfer to the government by the central bank.
"The Board thereafter approved the transfer of Rs 2,68,590.07 crore as surplus to the Central Government for the accounting year 2024-25," RBI said in a release.
The additional buffer comes at a time of global uncertainty, and when the government is in trade negotiations with America, which may have some bearing on future custom duty collections.
During accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of the pandemic, the Board had decided to maintain the Contingency Risk Buffer (CRB) at 5.50 per cent of the Reserve Bank’s Balance Sheet size to support growth and overall economic activity, RBI release said.
The CRB was increased to 6.00 per cent for FY 2022-23 and to 6.50 per cent for FY 2023-24. Based on the revised Economic Capital Framework (ECF), and taking into consideration the macroeconomic assessment, the Central Board decided to further increase the CRB to 7.50 percent, RBI added.
On May 7, Moneycontrol had reported that the RBI may transfer around Rs 2.5-3 lakh crore as dividend transfer to the government, sharply higher than what the central bank transferred last year, on account of profits made from its intervention in currency markets to stem the decline in the rupee in FY25.
Every year, the RBI makes an annual payout to the government from the surplus income it earns on investments and valuation changes on its dollar holdings, and the fees it gets from printing currency.
The RBI, after provisioning for bad debt, depreciation of assets, contributions to staff and superannuation fund and other matters, transfers the remaining surplus to the government, as required under the RBI Act.
The RBI has been a net seller of the dollar since October to defend the rupee from falling sharply against the greenback, which has made the Indian currency the least volatile among Asian and global peers.
On a gross basis, the central bank sold dollars’ worth $398.71 billion in FY25 and gross purchased $364.2 billion during the period.
In financial year 2024-25, the central bank net sold $69.661 billion, and purchased $25.15 billion. Such heightened selling of dollars may have increased the revenue for the central bank.
The logic implies that, like in any commercial transaction, the RBI accumulated dollars cheap and sold it when the price rose. The central bank accumulated dollars in the 83-84 range a dollar and sold in the 84-87 range.
The RBI dividend is a major revenue source for the government. As the manager of its finances, the RBI pays a dividend to the government to help from its surplus profit.
The government expects to receive Rs 2.56 lakh crore from the RBI and public sector banks in FY26, Finance Minister Nirmala Sitharaman said in her Budget speech on February 1.
Source: Manish M. Suvarna report in Moneycontrol
