RBI to pay Centre record ₹2.69-lakh crore in dividend for FY25

The Reserve Bank of India (RBI) Friday approved a record dividend payout of ₹2,68,590.07 crore to the Central government for the financial year 2024-25. The approved surplus far exceeds previous years' payouts and comes amid robust earnings from the central bank’s foreign exchange operations and gains from its bond portfolio. 

Economists had earlier estimated the dividend could fall between ₹2.5 lakh crore and ₹3.5 lakh crore, according to a report. Experts suggest the windfall will significantly ease the Centre’s fiscal position. 

Gaura Sengupta, Chief Economist at IDFC FIRST Bank, said, "RBI dividend was in line with our expectations at ₹2.7tn v/s last year’s dividend of ₹2.1tn, (IDFC First Bank estimate of ₹2.6tn to ₹3tn). In the FY26 Union Budget, dividend from RBI and PSUs is budgeted at ₹2.6tn, which implies RBI dividend of ~₹2.3tn. While details have not yet been released, income has likely been supported by earnings on foreign exchange transactions. RBI’s gross dollar sales surged to US$399bn in FY25 from US$153bn in FY24. The pick-up in gross dollar sales was led by Balance of Payments turning negative in FY25, due to slowdown in capital inflows. The margin on gross dollar sales also remains wide with historical cost accounting tracking at 69. This remains significantly below the spot rate."

"Interest income would be the other key source of revenue for RBI. RBI’s foreign currency assets rose by 1.3%YoY in FY25 (till March 28th), led by revaluation gains. As a % of total assets, foreign currency assets account for 64.4% share and government securities (mostly g-sec) 20.7% share. Around 85.6% of foreign currency assets are held as securities and the rest as deposits with other Central banks and BIS. Compared to FY24, interest income has likely reduced, due to dollar selling by RBI and decline in yields (both UST and g-secs)," said Sengupta.

The decision was taken at the 616th meeting of the RBI’s Central Board of Directors held in Mumbai under the chairmanship of Governor Sanjay Malhotra.

The RBI’s decision was guided by a revised Economic Capital Framework (ECF), approved by the Central Board on May 15. The revised ECF mandates that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained between 7.5% and 4.5% of the RBI’s balance sheet. For FY25, the CRB has been increased to the upper limit of 7.5%, reflecting improved macroeconomic stability and financial resilience.

“Based on the revised ECF, and taking into consideration the macroeconomic assessment, the Central Board decided to further increase the CRB to 7.5% and approved the transfer of ₹2,68,590.07 crore as surplus to the Central government for the accounting year 2024-25,” the RBI said in a statement.

This transfer marks a sharp increase from the CRB levels maintained during the pandemic years, when the buffer was kept at 5.5% to support growth. The CRB was gradually raised to 6% in FY23 and to 6.5% in FY24 before this year’s upward revision.

The board also reviewed the global and domestic economic situation and approved the central bank’s annual report and financial statements for the year ended March 31, 2025. "The board reviewed the global and domestic economic scenario, including risks to the outlook. The board also discussed the working of the Reserve Bank during the year April 2024-March 2025…," stated the RBI.

As per the RBI statement, deputy governors M. Rajeshwar Rao, T. Rabi Sankar, Swaminathan J., Dr. Poonam Gupta and other directors of the Central Board; Ajay Seth, secretary, Department of Economic Affairs; Nagaraju Maddirala, secretary, Department of Financial Services; Satish K. Marathe, Revathy Iyer, Prof Sachin Chaturvedi, Pankaj Ramanbhai Patel, and Dr Ravindra H. Dholakia, attended the meeting. 

Reacting to the development, Murthy Nagarajan, Head – Fixed Income, Tata Asset Management, says the RBI dividend of Rs. 2.69 lakh is lower than market expectation of Rs 3 lakh crores. "This is due to RBI revising its contingent liquidity buffer to 4.5 to 7.5 percent. RBI board has increased its contingent reserve buffer to 7.5 percent, due to which this amount is lower than Rs. 3 lakh crores which was the market expectation. This is a disappointment for the market, and we can expect some profit booking after the steep rally which we saw in the last 10 days."