Latest news with #ContingentRiskBuffer
Indian Express
5 days ago
- Business
- Indian Express
RBI's balance sheet expands 8.2% in 2024-25 on robust foreign earnings
Driven by strong income growth, particularly on account of robust earnings from foreign sources, the Reserve Bank of India's (RBI) balance sheet expanded by 8.2 per cent to Rs 76.25 lakh crore in the year 2024-25. The RBI's balance sheet stood at Rs 70.48 lakh crore as on March 31, 2024. The balance sheet of the RBI plays a critical role in the functioning of the country's economy, largely reflecting the activities carried out by the regulator, including the issuance of currency as well as monetary policy and reserve management. During 2024-25, its income grew by 22.77 per cent to Rs 3.38 lakh crore from Rs 2.76 lakh crore in 2023-24. The expenditure increased by 7.76 per cent to Rs 69,714.02 crore in 2024-25 from Rs 64,694.33 crore as on March 31, 2024, according to the RBI's annual report. The income from foreign sources surged 38.07 per cent to 2.59 lakh crore in 2024-25 from Rs 1.87 lakh crore in 2023-24. The rate of earnings on foreign currency assets was 5.31 per cent in the year 2024-25 as compared to 4.21 per cent in the previous year. The RBI's earnings from domestic sources declined 9.80 per cent from Rs 88,101.12 crore in 2023-24 to Rs 79,470.54 crore in 2024-25, mainly due to a decrease in interest on holding of rupee securities. The interest on holding of rupee securities, including oil bonds, dipped 7.63 per cent to Rs 85,524.67 crore. In the RBI's balance sheet, the increase on the assets side was due to a rise in gold, domestic investments and foreign investments by 52.09 per cent, 14.32 per cent and 1.7 per cent, respectively. On the liabilities side, expansion was due to an increase in notes issued, revaluation accounts, and other liabilities by 6.03 per cent, 17.32 per cent and 23.31 per cent, respectively. Domestic assets constituted 25.73 per cent while foreign currency assets, gold (including gold deposit and gold held in India) and loans and advances to financial institutions outside India constituted 74.27 per cent of total assets as on March 31, 2025 as against 23.31 per cent and 76.69 per cent, respectively, as on March 31, 2024. The total gold held by the RBI was 879.58 metric tonnes as on March 31, 2025, as compared to 822.1 metric tonnes as on March 31, 2024, reflecting an increase of 57.48 metric tonnes of gold during the year. The RBI's 'other liabilities' increased by 23.31 per cent from Rs 2.61 lakh crore as on March 31, 2024 to Rs 3.21 lakh crore as on March 31, 2025, primarily due to an increase in surplus payable to the Central Government. The RBI transferred Rs 2.69 lakh crore worth of surplus to the government for the year 2024-25, compared to Rs 2.11 lakh crore paid during 2023-24. As per the revised Economic Capital Framework (ECF), Contingent Risk Buffer (CRB) needs to be maintained in the range of 4.5-7.5 per cent of the size of the balance sheet. Last week, the RBI's central board approved that CRB may be maintained at 7.5 per cent of the size of the balance sheet of the Reserve Bank for the year 2024-25. Accordingly, a provision of Rs 44,861.7 crore was made and transferred to the contingency fund (CF) during 2024-25. The contingency fund is a specific provision meant for meeting unexpected and unforeseen contingencies, including depreciation in value of securities, risks arising out of monetary/exchange rate policy operations, systemic risks and any risk arising on account of special responsibilities enjoined upon the Reserve Bank. Table Income 3,38,308.09 2,75,572.32 22.77 Surplus transfer to government
Economic Times
24-05-2025
- Business
- Economic Times
RBI's Rs 2.68 lakh crore dividend bonanza beats govt estimate
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Mumbai: The central bank Friday declared a record surplus transfer of Rs 2.68 lakh crore for FY25 to the Centre--exceeding North Block's budget estimates of dividend receipts for this fiscal and beating the FY24 payout by nearly a third--and reworked the balance sheet-referenced distribution formula to make future payments more economic capital framework (ECF), which is the theoretical bedrock determining the payout range for a financial year, has been tweaked so as to ringfence the Reserve Bank of India 's ( RBI ) finances in times of financial Friday, the RBI Board raised the upper band of the Contingent Risk Buffer (CRB), now to be maintained within a significantly wider range of 7.5% to 4.5% of the central bank's balance band previously ranged from 6.5% to 5.5%.'This revised CRB range gives the RBI more room for future dividends,'' said Abhishek Upadhyay, senior economist, ICICI Securities Primary Dealership. 'With this payout, it is possible for the fiscal deficit to be lower by 10-20 basis points.'One basis point is 0.01 percentage dividend transfer to the government, based on the Bimal Jalan committee recommendations, has 'stood the test of time', and only some tweaking was required for the coming five years, said people familiar with the said at a time when the economy is seeing a steady, consistent growth rate, some alteration in dividend transfer formula may be required to suggest what the math should be for the next five years."The Bimal Jalan panel recommendations have stood the test of time, even during Covid... I don't see the panel formulations coming to such an end. Some kind of alterations will happen and RBI is working on it, maybe some tweaking (of the panel recommendations)...," said one of the ECF was adopted in August 2019 based on the Jalan-led Expert Committee announced fund transfer of Rs 2.68 lakh crore is 27% higher than the Rs 2.1 lakh crore paid to the government by its money manager last year. The budget, in February, had estimated receipts of Rs 2.56 lakh crore as dividend income from the RBI and other government financial the CRB was retained at 6.5%, as in the previous year, the surplus fund transfer could be Rs 3.5 lakh RBI's surplus transfer has become a key component in the government's management of fiscal balance. As the central bank's balance sheet and operations have been expanding, the transfers have also been increasing. Worried about a likely deterioration of the central bank's finances, a committee under former Governor Bimal Jalan was set up to prescribe a framework that was reviewed internally by the RBI recently. It has suggested new norms, including the widening of the contingency reserve buffer.'The extant ECF had met its objective of ensuring a resilient balance sheet for RBI, while maintaining a healthy transfer of surplus to the government,'' the RBI said in a statement Friday. 'Certain changes have, however, been made with the objective of further strengthening the framework to align better with any emerging risks.'The central bank said the changes to the framework Friday allow better risk management, especially in an uncertain trade environment globally.'The revised ECF provides requisite flexibility in the maintenance of risk buffers, considering the prevailing macroeconomic and other factors, while also ensuring needed intertemporal smoothing of the surplus transfer to the government,'' the RBI revised framework using a much wider reference frame allows flexibility and is more practical, experts said.'The decision to widen the Contingency Risk Buffer band to 4.5-7.5% of the balance sheet from 5.5-6.5% previously is pragmatic,'' said Anubhuti Sahay, head of India economic research, Standard Chartered Bank. 'It provides the RBI with the required flexibility to manage potential volatility in income generation and the objective of financial stability and allows for better predictability on dividend transfer to the government and thus fiscal deficit planning.'The Jalan committee recommended a capital framework that served well for the RBI as well as the government as it ended a controversy over how much surplus the central bank could keep with itself. Former Chief Economic Advisor Arvind Subramaniam first raised the issue years ago when the government was facing a tough fiscal situation that led to disputes with the revised framework also includes factoring in the market risks associated with the off-balance items of the central bank into the capital framework, it of the central bank also do not remain the same as its positions in the market determine whether its trades in the money and forex markets turn profitable. After Covid, many central banks have slipped into losses, and some of them have skipped transferring any surplus to their governments because of lack of any gains.'The same kind of revenue may not always be expected in the future and hence cannot be called a new normal as forex sales may not be as large as this year,'' said Madan Sabnavis, economist, Bank of Baroda. 'But, on the other hand, if buffers are lowered when conditions are normal, then there could be earnings from this side.'Under the new framework, the central bank could transfer all of the realised equity above the 7.5% contingency buffer, while not transferring any when it falls below the lower respect to the Surplus Distribution Policy, any available equity in excess of 7.5% of the balance sheet (after considering shortfall in market risk buffers, if any) may be written back from the Contingency Fund to income, the RBI said.'In case the available equity is below the lower bound of its requirement, no surplus will be transferred to the government until at least the minimum level of Required Realised Equity is achieved,'' the RBI said.
Time of India
24-05-2025
- Business
- Time of India
RBI declares 27% higher dividend on higher capital provision
The RBI has declared a record surplus transfer of Rs 2.68 lakh crore to the Centre for FY25, exceeding budget estimates. The economic capital framework has been tweaked, widening the Contingent Risk Buffer range to 4.5-7.5% of the balance sheet. This revision allows for better risk management and more predictable dividend transfers to the government. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The central bank Friday declared a record surplus transfer of Rs 2.68 lakh crore for FY25 to the Centre – exceeding North Block's budget estimates of dividend receipts for this fiscal and beating the FY24 payout by nearly a third - and reworked the balance sheet-referenced distribution formula to make future payments more economic capital framework (ECF), which is the theoretical bedrock determining the payout range for a financial year, has been tweaked so as to ringfence the Reserve Bank of India 's ( RBI ) finances in times of financial Friday, the RBI Board raised the upper band of the Contingent Risk Buffer (CRB), now to be maintained within a significantly wider range of 7.50 to 4.50 per cent of the central bank's balance sheet. The band previously ranged from 6.5 percent to 5.5 percent.'This revised CRB range gives the RBI more room for future dividends,'' said Abhishek Upadhyay, senior economist, ICICI Securities Primary Dealership. ``With this payout, it is possible for the fiscal deficit to be lower by 10-20 basis points.'One basis point is 0.01 percentage dividend transfer to the government, based on the Bimal Jalan committee recommendations, has "stood the test of time," and only some tweaking was required for the coming five years, a government official announced fund transfer of Rs 2.68 lakh crore is 27% higher than the Rs 2.1 lakh crore paid to the government by its money manager last year. The budget, in February, had estimated receipts of Rs 2.56 lakh crore as dividend income from the RBI and other financial institutions North Block the CRB was retained at 6.5%, as in the previous year, the surplus fund transfer could be Rs 3.5 lakh RBI's surplus transfer has become a key component in the government's management of fiscal balance. As the central bank's balance sheet and operations have been expanding, the transfers have also been increasing. Worried about a likely deterioration of the central bank's finances, a committee under former Governor Bimal Jalan was set up to prescribe a was reviewed internally by the RBI recently and that has suggested new norms, including the widening of the contingency reserve buffer."The extant ECF had met its objective of ensuring a resilient balance sheet for RBI, while maintaining a healthy transfer of surplus to the Government,'' the RBI said in a statement Friday. ``Certain changes have, however, been made with the objective of further strengthening the framework to align better with any emerging risks.'The central bank said the changes to the framework Friday allows better risk management, especially in an uncertain trade environment globally.'The revised ECF provides requisite flexibility in the maintenance of risk buffers, considering the prevailing macroeconomic and other factors, while also ensuring needed intertemporal smoothing of the surplus transfer to the government,'' the RBI revised framework using a much wider reference frame allows flexibility and is more practical, experts said.'The decision to widen the Contingency Risk Buffer band to 4.5-7.5% of the balance sheet from 5.5-6.5% previously is pragmatic,'' said Anubhuti Sahay, head of India economic research, Standard Chartered Bank. ``It provides the RBI with the required flexibility to manage potential volatility in income generation and the objective of financial stability and allows for better predictability on dividend transfer to the government and thus fiscal deficit planning.'The Jalan committee recommended a capital framework that served well for the RBI as well as the government as it ended a controversy over how much surplus the central bank could keep with itself. Former Chief Economic Advisor Arvind Subramaniam first raised the issue years ago when the government was facing a tough fiscal situation that led to disputes with the revised framework also includes factoring in the market risks associated with the off-balance items of the central bank into the capital framework, it of the central bank also do not remain the same as its positions in the market determine whether its trades in the money and forex markets turn profitable. After Covid, many central banks have slipped into losses, and some of them have skipped transferring any surplus to their governments because of lack of any gains.'The same kind of revenue may not always be expected in the future and hence cannot be called a new normal as forex sales may not be as large as this year,'' said Madan Sabnavis, economist, Bank of Baroda . ``But, on the other hand, if buffers are lowered when conditions are normal, then there could be earnings from this side.'Under the new framework, the central bank could transfer all of the realised equity above the 7.5 percent contingency buffer, while not transferring any when it falls below the lower respect to the Surplus Distribution Policy, any available equity in excess of 7.5% of the balance sheet (after considering shortfall in market risk buffers, if any) may be written back from the Contingency Fund to income, the RBI said."In case the available equity is below the lower bound of its requirement, no surplus will be transferred to the government until at least the minimum level of Required Realised Equity is achieved,'' the RBI said.
Hindustan Times
24-05-2025
- Business
- Hindustan Times
RBI's strong dividend to government boosted by USD sales, interest income: SBI report
The Reserve Bank of India's record dividend payout of nearly ₹2.7 trillion to the government has been made possible due to robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income, according to a report by the State Bank of India (SBI). The report noted that this significant surplus transfer was largely supported by the RBI's active participation in the foreign exchange market. In fact, the RBI was the largest seller of foreign exchange reserves among Asian central banks in January 2025. It said "This surplus payout is driven by robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income". The central bank took aggressive steps to stabilize the rupee during the year, including large-scale dollar sales. In September 2024, India's foreign exchange reserves had peaked at USD 704 billion. Following that, the RBI sold a large volume of dollars to maintain currency stability. Gross dollar sales during the current financial year, till February 2025, stood at a massive USD 371.6 billion, much higher than USD 153 billion recorded in the previous year (FY24). This aggressive selling helped the RBI book substantial foreign exchange gains, which added to the surplus. Additionally, the RBI earned more income from its rupee securities. The central bank's holdings in rupee securities rose by ₹1.95 lakh crore to ₹15.6 lakh crore as of March 2025. Although a decline in government securities (G-sec) yields impacted the mark-to-market (MTM) gains on these holdings, the overall interest income saw a steady rise. The report further highlighted the RBI's prudent approach in maintaining financial stability. While the dividend payout stands at ₹2.7 trillion, it could have exceeded ₹3.5 trillion if not for the RBI's decision to increase its risk buffer. The Contingent Risk Buffer (CRB), which acts as a safeguard against future risks, was maintained within a range of 7.5 per cent to 4.5 per cent of the RBI's balance sheet, as recommended by the central board. The transferable surplus was calculated under the revised Economic Capital Framework (ECF), approved by the RBI's Central Board during its meeting on May 15, 2025. This large payout is a windfall for the government. The Union Budget for 2025-26 had projected a total dividend income of ₹2.56 lakh crore from the RBI and public sector financial institutions. With this latest transfer, the actual amount will be much higher than the budget estimates.
India Gazette
24-05-2025
- Business
- India Gazette
RBI's strong dividend to govt boosted by USD sales, interest income: SBI report
Mumbai (Maharashtra) [India], May 24 (ANI): The Reserve Bank of India's record dividend payout of nearly Rs 2.7 trillion to the government has been made possible due to robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income, according to a report by the State Bank of India (SBI). The report noted that this significant surplus transfer was largely supported by the RBI's active participation in the foreign exchange market. In fact, the RBI was the largest seller of foreign exchange reserves among Asian central banks in January 2025. It said 'This surplus payout is driven by robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income'. The central bank took aggressive steps to stabilize the rupee during the year, including large-scale dollar sales. In September 2024, India's foreign exchange reserves had peaked at USD 704 billion. Following that, the RBI sold a large volume of dollars to maintain currency stability. Gross dollar sales during the current financial year, till February 2025, stood at a massive USD 371.6 billion, much higher than USD 153 billion recorded in the previous year (FY24). This aggressive selling helped the RBI book substantial foreign exchange gains, which added to the surplus. Additionally, the RBI earned more income from its rupee securities. The central bank's holdings in rupee securities rose by Rs 1.95 lakh crore to Rs 15.6 lakh crore as of March 2025. Although a decline in government securities (G-sec) yields impacted the mark-to-market (MTM) gains on these holdings, the overall interest income saw a steady rise. The report further highlighted the RBI's prudent approach in maintaining financial stability. While the dividend payout stands at Rs 2.7 trillion, it could have exceeded Rs 3.5 trillion if not for the RBI's decision to increase its risk buffer. The Contingent Risk Buffer (CRB), which acts as a safeguard against future risks, was maintained within a range of 7.5 per cent to 4.5 per cent of the RBI's balance sheet, as recommended by the central board. The transferable surplus was calculated under the revised Economic Capital Framework (ECF), approved by the RBI's Central Board during its meeting on May 15, 2025. This large payout is a windfall for the government. The Union Budget for 2025-26 had projected a total dividend income of Rs 2.56 lakh crore from the RBI and public sector financial institutions. With this latest transfer, the actual amount will be much higher than the budget estimates. (ANI)
