RBI board clears record ₹2.69 trillion surplus transfer to Centre for FY25

The board of the Reserve Bank of India (RBI) has approved the transfer of a record ₹2.69 trillion as surplus to the government for fiscal 2025, RBI said in a statement.

The amount is 27.5% higher than the transfer of ₹2.11 trillion in FY24, but lower than some market estimates.

The board reviewed the global and domestic economic scenario, including risks to outlook, and discussed RBI’s working before approving the annual report and financial statements for 2024-25, RBI said in the statement.

The transferable surplus for the year (FY25) has been arrived at on the basis of the revised economic capital framework (ECF), as approved by the central board in its meeting held on 15 May.

The ECF determines how much capital and risk provisioning the RBI should maintain.

The revised framework stipulates that the risk provisioning under the contingent risk buffer (CRB)—a crucial safety net for the central bank—be maintained within a range of 7.50 to 4.50% of the RBI’s balance sheet, the statement said.

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 5.50% of the RBI’s balance sheet size to support growth and overall economic activity.

The CRB was raised to 6% for FY23 and to 6.5% for FY24.

Based on the revised ECF, and taking into consideration the macroeconomic assessment, the board decided to further increase the CRB to 7.50%.

“The board thereafter approved the transfer of Rs2,68,590.07 crore as surplus to the Central Government for the accounting year 2024-25,” the Reserve Bank said in its release.

Deputy governors M. Rajeshwar Rao, T. Rabi Sankar, Swaminathan J., Poonam Gupta and other directors of the board–Ajay Seth, secretary, Department of Economic Affairs; Nagaraju Maddirala, secretary, Department of Financial Services, Satish K. Marathe, Revathy Iyer, Sachin Chaturvedi, Pankaj Ramanbhai Patel and Ravindra H. Dholakia–attended the meeting.

The approved surplus transfer provides a timely windfall to the central government as it seeks to finance welfare schemes and infrastructure projects.

The transfer is also expected to help the government manage its fiscal deficit and support economic recovery initiatives.

The additional buffer comes amid global uncertainty, and when the government is in trade talks with the US, which impact customs duty collections.

The RBI pays the government an annual salary from the surplus income it earns from investments, valuation charges on its dollar holdings, and printing currency fees.

The RBI’s decision to raise its risk buffer and transfer a record surplus to the government reflects confidence in the Indian economy, some analysts said.

“The RBI dividend was in line with our expectations at ₹2.7tn v/s last year’s dividend of INR2.1tn, (IDFC First Bank estimate of ₹2.6tn to ₹3tn),”said Gaura Sen Gupta, chief economist at IDFC First Bank.