RBI's bumper dividend transfer of ₹2.7 lakh crore promises to ease fiscal position, to take care of yield curve amidst exogenous turbulence

India's apex bank, the RBI has recently announced a dividend transfer of nearly Rs 2.7 trillion (Rs 2.69 lakh crore, to be precise), to the Government of India for the financial year 2024-25 as against Rs 2.11 lakh crore transferred for FY24, an increase of 27.4 per cent.

- RITWIK MUKHERJEE

Simultaneously, in a prudent move, the RBI has increased the risk buffer; otherwise, the dividend transfer could have topped Rs 3.5 trillion. This bumper dividend transfer at Rs 2.7 lakh crore promises to ease fiscal position and there are clear indications that it can manage the yield curve amidst exogenous turbulence while the CR buffer gets a fillip.

The RBI Board had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 7.5 per cent to 4.5 per cent of the RBI's balance sheet. The transferable surplus for the year has been arrived at on the basis of the revised Economic Capital Framework (ECF) as approved by the Central Board in its meeting held on May 15, 2025.