RBI Approves Record ₹2.69 Lakh Crore Dividend for FY25, Boosting Government’s Fiscal Space
The Reserve Bank of India (RBI) has announced a record-breaking dividend payout of ₹2.69 lakh crore for the financial year 2024-25, significantly higher than the ₹2.1 lakh crore transferred in FY24. The surplus transfer is expected to provide a substantial cushion to the Centre’s efforts to reduce the fiscal deficit to 4.4% of GDP in the current fiscal year.
The announcement came after the 616th meeting of the RBI’s Central Board held on Friday, where board members assessed both domestic and global economic conditions and associated risks. In addition to the dividend, the RBI has also increased its Contingency Risk Buffer (CRB) to 7.5%, up from 6.5% in the previous year.
Dividend Exceeds Budget Estimates
The Union Budget for FY25 had projected a combined dividend of ₹2.56 lakh crore from the RBI and public sector financial institutions. The RBI’s decision to transfer ₹2,68,590.07 crore exceeds this estimate, offering the government greater fiscal flexibility.
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This surplus is largely driven by increased income from foreign exchange operations, including robust gross dollar sales, higher interest earnings, and market-to-market gains on rupee securities. The RBI emerged as the top seller of foreign exchange reserves among Asian central banks in January 2025. India’s forex reserves peaked at $704 billion in September 2024, with the RBI estimated to have sold over $125 billion since then.
Strengthened Financial Buffer
The continued increase in the CRB reflects the RBI’s cautious approach to managing financial risks. During the COVID-19 pandemic years, the CRB stood at 5.5%, before being raised to 6% in FY23 and 6.5% in FY24. The buffer safeguards the central bank from unforeseen shocks such as credit defaults, asset depreciation, or other economic disturbances.
Support for Economic Liquidity
Economists note that this unprecedented dividend will not only aid fiscal consolidation but also inject significant liquidity into the banking system. According to projections, the impact of this transfer will likely be visible from early July.
“RBI’s FY25 dividend payout is buoyed by elevated US treasury yields, strong forex commission earnings, and interest income on government securities,” ICICI Research said in a recent note.
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IDFC First Bank highlighted that gross dollar sales rose to $371.6 billion till February FY25, up from $153 billion in FY24. Additionally, the decline in government securities (G-Sec) yields has led to substantial mark-to-market gains, boosting the RBI’s rupee securities portfolio by ₹1.95 lakh crore to ₹15.6 lakh crore as of March 2025.
Framework Based on Jalan Committee Recommendations
The dividend decision follows the Economic Capital Framework (ECF) recommended by the Bimal Jalan Committee. The ECF outlines how the central bank can allocate profits and maintain financial stability while supporting government needs.
The record surplus transfer marks a key moment in India’s macroeconomic landscape, providing fiscal headroom ahead of upcoming economic and electoral developments.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
