RBI Sets Record with Surplus Transfer to Government

The Reserve Bank of India (RBI) approved a record surplus transfer of Rs 2.11 lakh crore to the Central Government for 2023-24. This transfer marks a substantial increase from the previous year’s dividend.

The surplus calculation followed the Economic Capital Framework (ECF) recommended by the Bimal Jalan committee. This framework advises the RBI to maintain a Contingent Risk Buffer (CRB) between 5.5% and 6.5% of its balance sheet. The RBI sets aside provisions for risks before transferring surplus income to the government.

The RBI’s surplus comes from its income sources, including interest from government securities and foreign exchange operations. The surplus is the excess of income over expenditure.

The record transfer will aid the government’s fiscal consolidation efforts. Economists see this as a positive step towards maintaining fiscal discipline. The RBI’s management of foreign currency assets and lower dollar sales in FY24 contributed to the higher surplus.