The Reserve Bank of India (RBI) has announced a record dividend payout of ₹2.69 lakh crore to the central government for the financial year 2024-25, marking the highest-ever surplus transfer in the institution’s history. This decision, finalised at the 616th meeting of the RBI’s Central Board of Directors, chaired by Governor Sanjay Malhotra, represents a 27% increase over last year’s payout of ₹2.1 lakh crore and far exceeds the government’s initial budget estimates for non-tax revenues from the central bank and other state-run financial institutions.
The unprecedented dividend comes at a crucial time, providing a significant fiscal boost as the government seeks to narrow its fiscal deficit target to 4.4% of GDP for the current fiscal year, down from an estimated 4.8% in the previous year. The surplus transfer will directly strengthen the government’s finances, offering greater flexibility to address revenue shortfalls or unexpected expenditures, and is expected to improve liquidity conditions in the banking system, potentially easing government bond yields and supporting broader economic stability.
This year’s surplus has been calculated under the revised Economic Capital Framework (ECF). The ECF determines how much capital the RBI must retain as a contingency risk buffer (CRB) to safeguard against financial shocks. For FY25, the board decided to increase the CRB to 7.5% of the RBI’s balance sheet, up from 6.5% last year, reflecting a more cautious approach amid global economic uncertainties and domestic financial stability concerns.
Despite this increased provisioning, the central bank was able to transfer a higher surplus, thanks to robust income from foreign exchange operations, improved returns on overseas assets, and gains from liquidity management activities.
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Economists note that the dividend transfer exceeds budget assumptions by ₹40,000-₹50,000 crore, or around 11-14 basis points of GDP, giving the government a valuable buffer for fiscal management. The move is also expected to inject nearly ₹6 lakh crore of liquidity into the banking system, further supporting economic growth and market stability.
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