RBI to transfer ₹2.69 lakh crore to Govt. as dividend, raises CRB to 7.5% | Current Affairs | Vision IAS

Daily News Summary

Get concise and efficient summaries of key articles from prominent newspapers. Our daily news digest ensures quick reading and easy understanding, helping you stay informed about important events and developments without spending hours going through full articles. Perfect for focused and timely updates.

News Summary

Sun Mon Tue Wed Thu Fri Sat

RBI to transfer ₹2.69 lakh crore to Govt. as dividend, raises CRB to 7.5%

2 min read

Reserve Bank of India (RBI) Dividend Transfer

Key Decisions and Financial Transfers

  • The RBI has approved a transfer of ₹2,68,590.07 crore as surplus to the Union government for the accounting year 2024-25.
  • This transfer marks a 27% increase from the previous year's ₹2,10,874 crore dividend.
  • The Contingent Risk Buffer (CRB) has been increased to 7.50% based on the revised Economic Capital Framework (ECF) and macroeconomic assessments.

Historical Context

  • During 2018-19 to 2021-22, the CRB was maintained at 5.50% due to challenging macroeconomic conditions and the COVID-19 pandemic.
  • The CRB increased to 6% in FY 2022-23 and to 6.50% in FY 2023-24 before the current increase.

Additional Insights

  • The transferable surplus was decided based on the revised ECF, stipulating CRB within a 4.50%-7.50% range.
  • It has been noted that without the CRB increase, the dividend could have exceeded Rs. 3.5 trillion.
  • The Union Budget for 2025-26 estimated a dividend income of Rs. 2.56 lakh crore from the RBI and public financial institutions.

Market Implications

  • The dividend impacts fiscal deficit, potentially easing it by 20 bps to 4.2% of GDP.
  • The surplus is attributed to gross dollar sales, foreign exchange gains, and interest income.
  • In September 2024, foreign exchange reserves reached $704 billion, with significant sales to stabilize the currency.

Economic Perspectives

  • The surplus as a boost to non-tax revenue, aiding fiscal balance despite potential tax or disinvestment shortfalls.
  • The fiscal deficit-to-GDP ratio is projected to be contained at 4.4% in FY2026.
  • The dividend is lower than market expectations due to revised contingent liquidity buffers.
  • Tags :
  • Economic Capital Framework (ECF)
  • The Contingent Risk Buffer (CRB)
Subscribe for Premium Features