RBI approves ₹2.11 lakh crore dividend to government for FY24
The Reserve Bank of India's (RBI) Central Board of Directors has approved a record surplus transfer of ₹2,10,874 crore to the government for the financial year 2023-24. This decision was taken during the 608th meeting chaired by RBI Governor Shaktikanta Das. The surplus transfer is based on the Economic Capital Framework (ECF), adopted by the RBI in August 2019 following recommendations from the Bimal Jalan committee.
Dividend transfer exceeds government's expectations for FY24
The dividend to be transferred in 2024-25 is significantly higher than the government's anticipation. Experts suggest that this increased dividend will strengthen the government's liquidity surplus and subsequently its expenditure. For fiscal year 2024-25, the government had budgeted a dividend of ₹1.02 lakh crore, which is lower than this year's transfer by RBI.
RBI's surplus transfer marks a 140% increase from FY23
Compared to FY23, when the RBI transferred ₹87,416 crore to the Centre as surplus, this year's transfer indicates a nearly 140% increase. The decision was made after discussions on global and domestic economic scenarios, including potential risks to the outlook. This comes as part of the central bank's response to robust and resilient economic conditions.
RBI increases contingent risk buffer for FY23-24
The RBI board has decided to increase the Contingent Risk Buffer (CRB) to 6.5% for FY23-24, reflecting the economy's robustness and resilience. "During accounting years 2018-19 to 2021-22, owing to prevailing macroeconomic conditions and the onslaught of Covid-19 pandemic, the Board had decided to maintain CRB at 5.50% of Reserve Bank's Balance Sheet size," stated an RBI press release. The Committee recommended that risk provisioning under CRB be maintained within a range of 6.5 to 5.5% of RBI's balance sheet.
