RBI’s board reviews framework to decide on dividend transfer to Centre

Reserve Bank of India

The Reserve Bank of India’s Central Board of Directors on May 15 reviewed the Economic Capital Framework (ECF), which is a basis to decide on the dividend or surplus transfer to the government.

RBI transfers surplus to the government on the basis of the ECF, which was adopted by the central bank in August 2019, as per recommendations of an expert committee of the Reserve Bank of India, chaired by former governor Bimal Jalan.

The Committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5-5.5 per cent of the RBI’s balance sheet.

The meeting on May 15 was attend by Deputy Governors M Rajeshwar Rao, T Rabi Sankar, Swaminathan J, Poonam Gupta and other Directors of the Central Board – Economic Affairs Secretary Ajay Seth, DFS Secretary Nagaraju Maddirala, Satish K  Marathe, S Gurumurthy, Revathy Iyer, Sachin Chaturvedi, Venu Srinivasan, Pankaj Ramanbhai Patel and Ravindra Dholakia, RBI said in a press release.

The economists have predicted that dividend transfer to the government is expected to be in range of Rs 2.5-3 lakh crore, sharply higher than what the central bank transferred last year, on account of profit made from its intervention in currency markets to stem the decline in the rupee during FY25.

Last year, the central bank had transferred Rs 2.1 lakh crore to the government.

The government expects to receive Rs 2.56 lakh crore from the RBI and public sector banks in FY26, finance minister Nirmala Sitharaman had said in her Budget speech on February 1.