RBI Board Approves Transfer of Rs 2.69 Lakh Crore Surplus to Centre for 2024-25 | Current Affairs | Vision IAS
News Today Logo

RBI Board Approves Transfer of Rs 2.69 Lakh Crore Surplus to Centre for 2024-25

Posted 24 May 2025

2 min read

The transferable surplus for 2024-25 has been arrived at on the basis of the revised Economic Capital Framework (ECF) as approved by the Central Board.

  • Key Sources of RBI’s Income: Income from interest on government securities, Net interest from liquidity management tools (e.g., Liquidity Adjustment Facility), Loans, Interest earned on foreign currency investments

About the Economic Capital Framework (ECF)

  • Genesis: ECF was adopted by RBI in 2019, based on the recommendations of the Bimal Jalan Committee.
    • The ECF is an integral part of the Enterprise-wide Risk Management (ERM) framework (2012).
  • Concept: ECF provides a methodology for determining the appropriate level of risk provisions and profit distribution to be made under Section 47 of the RBI Act, 1934.
  • Therefore, maintaining adequate provisions in the form of Economic Capital is crucial to absorb risks that may arise from any unforeseen events.
  • Components of Economic Capital under ECF:
    • Realized Equity: This consists of RBI’s Capital, Reserve Fund, Contingency Fund (CF), and Asset Development Fund (ADF).
      • Contingent Risk Buffer (CRB): Component of RBI’s realized equity to provide for monetary and financial stability, credit, and operational risks.
    • Revaluation Balances: The unrealized gains, net of losses, resulting from exchange rate, gold price and interest rate movements.
  • Tenure of the Framework: The Committee recommended the framework to be reviewed every 5 years. 

Major Revisions in ECF

  • The risk provisioning under the CRB: It has been expanded within a range of 4.5 per cent to 7.5 per cent of the RBI’s balance sheet.
    • The increase in CRB to 7.5 per cent for 2024-25 reduced the dividend.
    • The RBI’s CRB is the country’s savings for a ‘rainy day’ (a financial stability crisis) which the central bank consciously maintained in view of its role as Lender of Last Resort (LoLR).
  • Market Risk: Now includes both on- and off-balance sheet exposures; minor currency assets also covered.
  • Tags :
  • Economic Capital Framework
  • RBI dividend
  • Contingent Risk Buffer
Watch News Today
Subscribe for Premium Features