RBI expected to transfer Rs 1000 billion to government in FY 2025

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Shaktikanta Das, RBI Governor
Shaktikanta Das, RBI Governor

The government has budgeted a dividend of Rs 1020 billion for financial year 2025 for RBI, public sector banks and financial institutions. It was Rs 1044 billion in financial year 2024. The Reserve Bank of India (RBI) may transfer around Rs 1,000 billion to the government in FY 2025, according to a report by Union Bank of India (UBI). The report said that RBI is expected to maintain a strong dividend payout in the financial year 2025 (FY25) as well.

This estimate represents a slight increase from the Rs 874 billion transferred in the previous financial year. According to the report, “The government has budgeted FY2025 dividend for RBI, public sector banks and financial institutions at Rs 1020 billion. It was Rs 1044 billion in FY 2024. In our view, this is a preliminary estimate for last year’s total dividend. This comes as a positive surprise considering the budget estimate was only Rs 480 billion.

Additionally, interest from liquidity operations has boosted RBI’s income, especially as the banking system is back in deficit mode from September 2023. Although RBI’s profit from forex sales declined slightly due to lower sales, the reserves are expected to remain adequate despite the increase in the weighted average cost of reserves. Moreover, decline in provisions also contributed to increase in RBI’s dividend.

Despite several factors influencing RBI’s dividend calculations such as interest income and foreign exchange (FX) gains, analysts predict strong dividend figures to remain. The majority of the RBI’s balance sheet, about 70 per cent, consists of foreign currency assets, with domestic government bonds accounting for 20 per cent. The interest income from these securities is expected to be Rs 1.5-1.7 lakh crore.

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