RBI Approves Rs 2.11 Lakh Crore Dividend Payout to Centre for FY24, Up 140% YoY

The Reserve Bank of India (RBI) approved a substantial dividend payout of Rs 2.11 lakh crore to the central government for the financial year 2023-24, more than double the Rs 87,416 crore transferred in 2022-23. This decision was taken at the 608th meeting of the Central Board of Directors of the RBI, chaired by Governor Shaktikanta Das. The Board decided to transfer a surplus of Rs 2,10,874 crore to the Central Government for the accounting year 2023-24.

The dividend payout for 2023-24 marks a significant increase of approximately 141% compared to the previous fiscal year. This unexpected surplus is notably higher than earlier estimates, which anticipated a dividend in the region of Rs 1 lakh crore. The decision was influenced by several factors, including a notable rise in interest earnings from the RBI’s foreign exchange assets, driven by the US Federal Reserve’s aggressive interest rate hikes in recent years.

With the revival of economic growth in FY 2022-23, the RBI increased its Contingent Risk Buffer (CRB) to 6.00%. Given the continued robustness and resilience of the economy, the Board decided to further raise the CRB to 6.50% for FY 2023-24. The CRB, maintained between 5.5-6.5% of the RBI’s balance sheet, serves as a safeguard against unforeseen situations arising from depreciation of securities or monetary/exchange rate policy risks.

During the 608th Meeting of the Central Board in Mumbai, members deliberated on the global and domestic economic scenarios, including potential risks to the economic outlook. The higher dividend payout is expected to aid the Centre in achieving its fiscal deficit target of 5.1% of GDP for FY25 and provide the newly elected government with additional funds for expenditure.

Each year, the RBI transfers a portion of its surplus income to the central government. This income is generated from investments, fluctuations in the valuation of its dollar reserves, and revenue earned from currency printing fees. The substantial increase in the dividend for FY 2023-24 highlights the central bank’s strong financial performance and the resilient state of the Indian economy.

Leave a Reply

Your email address will not be published. Required fields are marked *