RBI Shocks Markets with Record ₹2.69 Lakh Crore Dividend to Government
The Reserve Bank of India (RBI) has announced a historic dividend payout of Rs 2.69 lakh crore to the government for the financial year 2024-25
New Delhi: The Reserve Bank of India (RBI) has announced a historic dividend payout of Rs 2.69 lakh crore to the government for the financial year 2024-25. This record transfer is driven by strong gross dollar sales, higher foreign exchange (forex) gains, and increased interest income, according to a detailed report by SBI Research.
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Robust Forex Sales and Gains Fuel RBI’s Dividend Bonanza
The RBI emerged as the top seller of foreign exchange reserves among Asian central banks in January 2025, helping stabilize the Indian rupee. Foreign exchange reserves reached an all-time high of $704 billion in September 2024. The RBI’s strategic sale of dollars has been a key factor in generating significant forex gains, contributing substantially to the dividend payout.
RBI Increases Risk Buffer, Capping Dividend Potential
Despite the record dividend, the RBI prudently raised its Contingent Risk Buffer (CRB) to 7.5% of its balance sheet, up from 6.5% in FY24 and 6.0% in FY23. This move, approved by the RBI Central Board on May 15, 2025, reduced the potential dividend payout, which could have otherwise crossed Rs 3.5 lakh crore. The buffer is part of the revised Economic Capital Framework (ECF) designed to maintain financial stability.
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Liquidity Operations and Interest Income Boost RBI’s Surplus
The RBI’s surplus generation was influenced by its Liquidity Adjustment Facility (LAF) operations and interest earnings from both domestic and foreign securities. The system liquidity shifted from absorption mode (June to December 2024) to injection mode (mid-December 2024 to March 2025), impacting RBI’s operational expenses and income.
Fiscal Impact: Dividend Transfer Exceeds Budget Estimates
The Union Budget 2025-26 had projected a combined dividend income of Rs 2.56 lakh crore from the RBI and other public sector financial institutions. With the RBI’s dividend alone surpassing this figure, the fiscal deficit is expected to ease by 20 basis points to 4.2% of GDP. This provides the government with an additional fiscal space of approximately Rs 70,000 crore for spending without altering other budgetary assumptions.
RBI’s Dividend Payout Provides Boost to Government Finances
The RBI’s robust dividend transfer reflects strong macroeconomic management and a healthy balance sheet. The prudent increase in risk buffers ensures continued financial stability while enabling the government to leverage higher revenue for developmental and welfare programs.
