Budget pegs RBI, PSU banks dividend in FY25 at Rs 1.02 lakh crore

While the central bank's interventions in the foreign exchange market helped boost its coffers, the dividend it finally transferred could have been as high as Rs 1.2 lakh crore if not for the decision by the RBI's board to raise the central bank's Contingency Risk Buffer to 6.0 percent from 5.5 percent.

The Contingency Risk Buffer comprises the RBI's provisions to cover any potential risks — be it credit, operational, financial, or related to monetary stability — and can be described as the country's savings for a rainy day.

The RBI will likely transfer the dividend to the Centre in May 2024 after its accounts for 2023-24 are finalised. As such, the dividend for 2024-25 will be from the RBI's operations for 2023-24.

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In the course of performing its duties, the RBI generates revenue. After meeting its expenses, providing for any losses on its investments, and maintaining enough capital, the central bank must transfer any remaining profits to the central government in the next financial year as a dividend.

However, over the years, the central bank's dividend has become a key source of revenue for the government, with a change in its economic capital framework in August 2019 by the Bimal Jalan-led expert committee resulting in even larger sums being transferred to the Centre.