RBI FY25 Annual Dividend To Overshoot Estimates
The RBI is expected to declare its surplus funds transfer to the government later this month.
Mumbai:The Reserve Bank of India (RBI) is expected to transfer a record Rs 2.8 lakh crore to Rs 3.1 lakh crore as dividend to the central government for accounting year 2024-2025 compared to a record Rs 2.1 lakh crore it had paid in the previous year. Higher profit on massive dollar sales, increase in interest earnings from government bonds and foreign currency assets should contribute to the increase in the dividend payout, economists said. The windfall would help the government in managing the fiscal numbers.
Madhavi Arora, lead economist at Emkay said, “We expect RBI dividend transfer of around Rs 2.8 lakh crore to Rs 3.1 lakh crore versus Rs 2.1-Rs 2.2 lakh crore expected in the Union Budget. This will likely buffer the fiscal math for any slippages on the tax revenue front and possible mild increase in the defence revenue.”
Madan Sabnavis, chief economist at Bank of Baroda said, “It could be higher than last year’s payout, maybe in the region of Rs 2 to 2.5 lakh crore aided by dollar sales, RBI’s lending to banks in the form of Variable Reverse Repo auction and revaluation of forex reserves. So, all these factors would contribute to higher income for the RBI and help the government in managing fiscal numbers.”
The RBI is expected to declare its surplus funds transfer to the government later this month.
In the Union Budget speech on February 1, Finance Minister Nirmala Sitharaman said the government expects to receive dividends of Rs.2.56 lakh crore in FY26 from the RBI and public sector banks.
The central bank annually pays out a surplus to the government, drawn from income generated through investments, valuation gains on its dollar reserves, and fees from printing currency. This amount is determined after accounting for provisioning for bad loans, asset depreciation, employee benefits, and other statutory expenses under the RBI Act.
The central bank's actions, especially its strategic dollar sales to support the rupee, have played a critical role in minimizing the volatility of the Indian currency compared to its Asian and global counterparts. From April to February in FY25, the RBI engaged in heavy dollar selling amounting to $371.551 billion while purchasing $322.685 billion. These operations not only helped in defending the rupee against the dollar but also are expected to have boosted the RBI's revenues significantly.
