The Reserve Bank of India (RBI) is poised to transfer a record-breaking dividend of ₹2.5–3 lakh crore to the central government for the financial year 2024–25 (FY25). This anticipated payout significantly exceeds the ₹2.1 lakh crore transferred in the previous fiscal year and surpasses the government’s budget estimate of ₹2.3 lakh crore .
📈 Factors Driving the Increased Dividend
Several key factors have contributed to this substantial increase in the RBI’s surplus:
- Robust Forex Operations: The RBI engaged in extensive foreign exchange market interventions to stabilize the rupee, selling approximately $371.6 billion and purchasing $322.7 billion during FY25. These operations generated significant profits .
- Elevated Interest Income: Higher yields on U.S. Treasury securities and increased interest earnings from the RBI’s foreign currency assets have bolstered the central bank’s income .
- Market-to-Market Gains: Declining government securities (GSec) yields have enhanced the value of the RBI’s securities portfolio, contributing to the surplus .
🏛️ Fiscal Implications for the Government
The anticipated dividend transfer is expected to provide a significant boost to the government’s finances
- Fiscal Deficit Management: The additional funds will help bridge the fiscal gap, reducing the need for increased borrowing and aiding in maintaining the fiscal deficit target .
- Enhanced Spending Capacity: With increased revenue, the government can allocate more funds towards infrastructure development, social welfare programs, and other critical sectors without exacerbating the fiscal deficit.
- Improved Liquidity: The surplus transfer will inject liquidity into the banking system, potentially leading to lower bond yields and improved financial market conditions
📅 Timeline for the Dividend Transfer
The RBI is expected to announce the exact dividend amount and complete the transfer by late May 2025. This timeline aligns with the central bank’s annual practice of transferring surplus funds to the government after finalizing its accounts for the fiscal year. India Today
