Mumbai: A record dividend payment of Rs 2.69 lakh crore to the government for the fiscal year 2024-2025 was approved by the Reserve Bank of India (RBI) on 23 May.
This is much more than the Rs 87,416 crore paid in FY23 and represents a 27.4 per cent increase over the Rs 2.1 lakh crore transferred in FY24.
The decision, made at the 616th meeting of the RBI’s Central Board of Directors, chaired by Governor Sanjay Malhotra in Mumbai, comes at a time when the government is aiming to narrow the fiscal deficit to 4.4 per cent of GDP in the current fiscal year.
Additionally, the sum exceeds the Rs 2.6 lakh crore that the government had allocated for FY26 from the RBI, state-run banks, and financial institutions taken together.
The dividend amount is still the largest surplus transfer from the central bank to the exchequer in history, albeit being somewhat less than the Rs 2.8–3 lakh crore market forecasts.
Economists attribute the robust surplus to higher earnings from foreign exchange transactions, returns on overseas investments and effective liquidity and interest rate management.
The RBI also increased its contingency risk buffer (CRB) from 6.5 per cent to 7.5 per cent in a concurrent action. Based on the Bimal Jalan Committee’s recommendations, the CRB is a crucial component of the Economic Capital Framework (ECF) and serves as a financial safety net to absorb possible losses.
However, the increase reflects a more cautious stance amid global macroeconomic uncertainties and domestic financial stability considerations.
As the larger-than-expected transfer relieves fiscal pressures and maybe encourages reduced market borrowing, the record payout is predicted to have beneficial spillover effects, including a probable fall in government bond yields, according to reports.
