In a major financial boost for the Indian government, the Reserve Bank of India (RBI) announced a record transfer of Rs. 2,68,590 crore as surplus for the financial year 2024–25. This amount is the highest-ever dividend paid by the central bank to the government, significantly higher than last year’s Rs. 2.1 lakh crore.
The decision was made at the 616th meeting of the RBI’s Central Board of Directors, held in Mumbai under the chairmanship of Governor Shri Sanjay Malhotra. During the meeting, the Board reviewed domestic and global economic conditions, approved the RBI’s annual report and financial statements, and discussed risk provisioning under a newly revised framework.
But the big question is: How did RBI make this much money in surplus?
What Is RBI’s Surplus?
The surplus (or dividend) that the RBI transfers to the government is basically the net profit it makes after accounting for all expenses, provisions, and reserves. Since the RBI is not a commercial bank, it earns income mainly through managing the country’s foreign exchange reserves, investment in government securities, and currency management.
Once the RBI sets aside money for its operational needs and buffers (like the Contingent Risk Buffer), the rest is considered surplus and is transferred to the central government as a dividend.
Key Reasons Behind the Record Surplus
1. High Returns from Foreign Exchange Reserves: the RBI manages over $600 billion in foreign exchange reserves, invested mainly in foreign government bonds, including U.S. Treasury bonds. In recent years, global interest rates have gone up, especially in developed economies. As a result, the interest income from these bonds has also increased.
2. Gains from Currency and Gold Valuation: The RBI also earns what are called revaluation gains. These are not actual cash profits, but accounting gains that arise when the value of foreign exchange and gold holdings changes.
For example, when the rupee weakens against the U.S. dollar, the value of the RBI’s dollar reserves goes up in rupee terms. Similarly, gold prices have been on the rise, which boosts the RBI’s gold holdings on paper.
3. Interest Income from Domestic Operations: The RBI holds a large amount of Indian government securities (G-Secs). It earns regular interest payments on these bonds. Additionally, the RBI conducts various liquidity operations in the money market (like reverse repo transactions), where it earns more interest income. In short, higher interest rates across both foreign and domestic markets have worked in the RBI’s favour.
4. Profits from Forex Market Interventions: To manage the stability of the Indian rupee, the RBI actively buys and sells foreign currency in the forex market. During times of high volatility, such interventions often result in profits. In FY25, with global geopolitical tensions and currency market movements, the RBI likely made gains from such operations.
Revised Risk Framework and Efficient Buffering
Earlier this month, the RBI adopted a revised Economic Capital Framework (ECF), which determines how much money the RBI should keep aside as a safety buffer. Under this new framework, the Contingent Risk Buffer (CRB) a key part of the RBI’s reserves, has been raised to 7.5% of its balance sheet, the upper end of the suggested range. Despite this increase in reserves, the RBI still managed to transfer a record surplus, showing strong profitability and efficient capital management.
Other Dividend Sources
In comparison to the RBI’s dividend for FY 2024–25, the total dividend disbursed by PSUs and other government investments is as follows:
| Sr.No. | Company/Entity | Dividend (Rs. Crore) |
| 1 | Coal India Ltd. | 10,252.09 |
| 2 | Oil & Natural Gas Corporation Ltd. | 10,001.97 |
| 3 | Indian Oil Corporation Ltd. | 5,090.54 |
| 4 | Power Grid Corporation of India Ltd. | 4,824.59 |
| 5 | NTPC Ltd. | 4,088.16 |
| 6 | Telecommunications Consultants (India) Ltd. | 3,761.50 |
| 7 | Hindustan Zinc Ltd. | 3,619.06 |
| 8 | Bharat Petroleum Corporation Ltd. | 3,562.47 |
| 9 | Power Finance Corporation Ltd. | 3,002.78 |
| 10 | Indian Railway Finance Corporation Ltd. | 2,595.88 |
| 11 | GAIL (India) Ltd. | 2,201.92 |
| 12 | Hindustan Aeronautics Ltd. | 1,820.58 |
| 13 | NPCIL – Indian Oil Nuclear Energy Corporation Ltd. | 1,766.00 |
| 14 | Airports Authority of India | 1,595.39 |
| 15 | NMDC Ltd. | 1,496.57 |
| 16 | NHPC Ltd. | 1,286.33 |
| 17 | Oil India Ltd. | 1,151.96 |
| 18 | Dividends and Profits Earned on the Funds Released to the SWAMIH Fund | 1,043.27 |
| 19 | National Aluminium Company Ltd. | 941.79 |
| 20 | Housing and Development Corporation of India Ltd. | 863.32 |
| 21 | Bharat Electronics Ltd. | 859.71 |
| 22 | IDBI Bank Ltd. | 733.48 |
| 23 | Mazagon Dock Shipbuilders Ltd. | 603.95 |
| 24 | Indian Railway Catering and Tourism Corporation Ltd. | 549.09 |
| 25 | E.C.G.C. Ltd. | 433.80 |
| 26 | Container Corporation of India Ltd. | 400.66 |
| 27 | SJVN Ltd. | 389.04 |
| 28 | Dividends from National Investment & Infrastructure Fund Ltd. (NIIFL) | 384.82 |
| 29 | Profit from SPMIL | 364.11 |
| 30 | Rail Vikas Nigam Ltd. | 320.45 |
| 31 | Other Companies | 425.84 |
| TOTAL | All Companies | 74,016.68 |
In total, the government has received Rs. 74,016.68 crore in dividends from PSUs and other investments for the financial year 2024–25.
Why This Surplus Matters
RBI’s massive dividend will come as a relief to the central government, especially as it looks to manage fiscal deficit targets and support public spending. This money can help fund infrastructure projects, welfare schemes, or reduce borrowings.
For context, the Rs. 2.68 lakh crore surplus is over 1% of India’s GDP and about double the RBI’s average surplus in previous years. It gives the government much-needed fiscal headroom without raising new taxes or increasing debt.
Brokerage View On this
Morgan Stanley: The higher RBI dividend supports fiscal consolidation and helps maintain public capital expenditure momentum despite global challenges to growth and revenue.
Nomura: Higher dividends offer fiscal room, prompting a 0.1% cut in the fiscal deficit forecast to 4.4% of GDP. Core liquidity may rise to Rs 5 trillion, though banking liquidity stays near Rs 2 trillion. More RBI liquidity support, especially via forex swaps, is expected.
Bank of America (BofA): The RBI’s record dividend reflects a flexible economic capital framework, while fiscal slippage risks are viewed as minimal.
Conclusion
The Reserve Bank of India’s record surplus transfer of Rs. 2.68 lakh crore is a sign of a strong central bank that is managing its assets efficiently in a challenging global environment. It also shows how central banks can play a supportive role for governments, not just by setting interest rates but also by sharing profits when conditions allow.
Written By Fazal Ul Vahab C H
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