RBI Dividend

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The Reserve Bank of India (RBI) has approved the transfer of a ₹2.69 lakh crore surplus to the Union Government as dividend for the financial year 2024-25.

What is a Dividend in Public Finance?

• A dividend refers to a portion of profits returned by a corporation or institution to its shareholders; in the case of the RBI, the Government of India is the sole shareholder.
• Dividends are a non-tax revenue source for the government and help in bridging fiscal deficits.
• RBI dividends are governed by the Reserve Bank of India Act, 1934 and are subject to approval by the RBI Central Board.
• Dividend Yield measures the return from dividends relative to the stock price, calculated as:
  • Dividend Yield = (Annual Dividend per Share) / (Current Market Price of Share)
• Although private dividends require shareholder approval, RBI’s transfer is a policy-based institutional mechanism.

Why Did RBI Earn Higher Surplus in 2024-25?

• The higher surplus in 2024-25 is attributed to:
  • Increased sale of foreign exchange reserves, especially in January 2025, when the RBI was the top seller among Asian central banks.
  • Higher interest income from investments in government securities and foreign assets.
  • Gains from forex transactions amid volatility in global markets.
• This is 27% higher than the ₹2.10 lakh crore dividend transferred in the previous year (2023-24), indicating a sharp rise in RBI’s earnings.
• The transferable surplus was calculated as per the Revised Economic Capital Framework (ECF), approved on May 15, 2025.
• The ECF determines how much surplus RBI can safely transfer while keeping enough capital to absorb financial shocks.

RBI Dividend FAQs

Q1: What is the RBI Dividend?
Ans: RBI Dividend refers to the surplus profit that the Reserve Bank of India transfers to the Central Government, after meeting its operational expenses and contingency provisions.

Q2: Under what legal provision does RBI transfer dividends?
Ans: The transfer is made under Section 47 of the RBI Act, 1934, which mandates that any surplus from RBI’s operations be transferred to the Government.

Source: TH

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