Is the RBI Preparing to Transfer a Record Dividend to the Government?

New Delhi, May 21 (NationPress) The Reserve Bank of India (RBI) is poised to transfer an impressive dividend to the Central government, estimated to be between Rs 2.5-3 lakh crore. This announcement has sparked a surge in short-term bonds, according to analysts on Wednesday.

This upcoming dividend marks a substantial increase from last year's transfer of Rs 2.1 lakh crore.

“This dividend is expected to exceed the budgeted figure of Rs 2.6 lakh crore (or Rs 2.6 trillion) for FY26, anticipated from the RBI, nationalised banks, and financial institutions collectively. A significant factor driving such a high dividend could be the robust profits from dollar sales,” stated Rajani Sinha, Chief Economist at CareEdge Ratings.

The gross dollar sales have surged to $371.6 billion up to February in FY25, compared to $153 billion for the entirety of FY24.

The increase in dollar sales, along with a favorable margin between historical purchase prices and current sales prices, is expected to yield considerable profits from dollar transactions throughout FY25.

“Additionally, factors such as interest income from both rupee and foreign securities may have contributed to the higher dividend,” Sinha noted.

The previous record dividend transfer of Rs 2.1 lakh crore during 2024-25 played a crucial role in maintaining fiscal discipline, allowing the Finance Ministry to keep funding large-scale infrastructure projects and social welfare initiatives aimed at benefiting the underprivileged.

This was a dramatic increase from the Rs 87,416 crore transferred to the government in 2023-24 for profits made in 2022-23. The government is set to receive another significant boost through the RBI’s dividend this fiscal year as well.

Among the RBI’s earnings, foreign exchange transactions are expected to be pivotal, especially considering the central bank's efforts to stabilize the rupee through robust dollar purchases earlier in fiscal 2025 and the differences in current versus historical exchange rates.

“In addition, the interest earned from government securities and funds provided to banks during previous liquidity constraints could result in a transfer that reaches record levels of approximately Rs 2.5-2.7 lakh crore this year,” remarked Radhika Rao, Senior Economist at DBS Bank.

With the RBI surplus exceeding expectations and savings on several expenditure items, the central government finds itself in a strong position to mitigate growth slowdown risks and any potential emergency spending needs.