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Time of India
3 days ago
- Business
- Time of India
Interest rates, dollar sales boost RBI income by 27%
A surge in global interest rates and gains from dollar sales to stem the rupee's fall boosted the Reserve Bank of India's (RBI's) FY25 net income by 27%, enabling it to transfer a record surplus to the central government and help bridge the fiscal gap. North Block's money manager also demonstrated the prudence it expects from mainstream lenders, boosting gold holdings in its overall asset mix to mitigate quality slippage risks. The central bank's net income rose to ₹2.69 lakh crore last fiscal, up from ₹2.11 lakh crore a year earlier, as its investments in overseas assets yielded decade-high returns, its annual report shows. 'Income from foreign sources increased 38% to ₹2.58 lakh crore,'' the annual report said. 'The rate of earnings on foreign currency assets was 5.31% during the year compared with 4.21%'' in the year before that. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Dukung Orang Terkasih Menghadapi Limfoma: Mulai Di Sini Limfoma Klik Di Sini Undo Income from Forex Transactions Up 33% A sharp increase in the returns from foreign currency assets (FCA) of the central bank helped it last week pay a dividend of ₹2.69 lakh crore to the government, up from ₹2.1 lakh crore a year ago, giving the Centre a fiscal space of 0.12% of GDP. The payout was higher despite an increase in the contingency risk buffer (CRB) to a maximum 7.5% of the RBI's balance sheet under a revised economic capital framework (ECF). Live Events 'Earnings on FCA improved significantly on account of better returns on the dollar,'' said Dipanwita Mazumdar, economist at Bank of Baroda . 'This becomes critical given that our forex reserves held by the RBI have been increasing and are being invested in various avenues.'' Interest income from investments in foreign securities was up 48% to ₹97,007 crore against ₹65,328 crore in FY24. The report also says that RBI's income from foreign exchange transactions rose 33% to ₹1.11 lakh crore in FY25, against ₹83,616 crore a year ago. 'This ensures that the Centre meets its fiscal deficit target of 4.4% of GDP—if not exceed,' said Gaura Sengupta, chief economist, IDFC Bank. In FY19, the RBI adopted the ECF that required the central bank to maintain a contingency risk buffer of 5.5–6.5%. 'The dividend would have been even higher if the provisioning wasn't increased to 7.5% of total assets from 6.5% earlier,' said Sengupta. 'Indeed, if the provisioning was maintained according to the old framework, the dividend would have been ₹3.5 lakh crore.' Under the revised ECF, the CRB is 4.5–7.5% of the central bank's balance sheet. 'The dividend announcement, though lower than market expectation, was still larger than the budgeted estimate by 0.15% of GDP,'' said Anubhuti Sahay, Head of India Economics Research, Standard Chartered Bank. Price Stability, Liquidity Going forward, domestic economic activity is expected to strengthen from the lows of the first half of FY25, said the annual report. The economic outlook is an important deciding factor in arriving at the CRB levels. Headline inflation is expected to ease and move further toward the legally mandated target in 2025–26, said the annual report. Monetary policy is committed toward achieving durable price stability, which is a necessary prerequisite for high growth on a sustained basis, said the report. The Reserve Bank will undertake liquidity management operations in sync with the monetary policy stance and keep system liquidity adequate to meet the needs of the productive sectors of the economy, said the annual report. In FY25, the RBI's total expenditure rose 7.76% to ₹69,714 crore, due to higher interest spends, printing of notes and employee costs. The expenditure also includes provisions toward the contingency fund and asset development fund (ADF). However, no provision was made toward ADF. An amount of ₹44,861.70 crore was provided toward the contingency fund to maintain the Available Realised Equity at the level of 7.5% of the balance sheet. Accordingly, the balance in CF as on March 31, 2025, was ₹5.42 lakh crore, compared with ₹4.29 lakh crore as on March 31, 2024. The size of the balance sheet increased by ₹5.78 lakh crore, or 8.2%, to ₹76.25 lakh crore. The increase on the assets side was due to a rise in gold holdings, domestic investments and foreign investments by 52%, 14.3% and 1.7%, respectively. On the liabilities side, expansion was due to an increase in notes issued, revaluation accounts, and other liabilities by 6.03%, 17.32% and 23.31%, respectively. Domestic assets constituted 25.73% 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% of total assets as on March 31, 2025, against 23.31% and 76.69%, respectively, as on March 31, 2024. The share of gold in net foreign assets increased to 12% as at end-March 2025 from 8.3% as at end-March 2024, mainly due to revaluation gains from gold prices. Net credit to the government expanded during the year owing to the liquidity injection through purchase of G-secs via open market operations during January–March 2025.
Economic Times
3 days ago
- Business
- Economic Times
Interest rates, dollar sales boost RBI income by 27%
RBI's FY25 net income surged by 27% due to higher global interest rates and dollar sales, enabling a record surplus transfer to the government. Increased returns from foreign currency assets and forex transactions significantly contributed to this rise. The central bank also strategically increased its gold holdings to bolster its asset mix and manage risks. Tired of too many ads? Remove Ads Income from Forex Transactions Up 33% Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Price Stability, Liquidity A surge in global interest rates and gains from dollar sales to stem the rupee's fall boosted the Reserve Bank of India's (RBI's) FY25 net income by 27%, enabling it to transfer a record surplus to the central government and help bridge the fiscal gap. North Block's money manager also demonstrated the prudence it expects from mainstream lenders, boosting gold holdings in its overall asset mix to mitigate quality slippage central bank's net income rose to ₹2.69 lakh crore last fiscal, up from ₹2.11 lakh crore a year earlier, as its investments in overseas assets yielded decade-high returns, its annual report shows.'Income from foreign sources increased 38% to ₹2.58 lakh crore,'' the annual report said. 'The rate of earnings on foreign currency assets was 5.31% during the year compared with 4.21%'' in the year before that.A sharp increase in the returns from foreign currency assets (FCA) of the central bank helped it last week pay a dividend of ₹2.69 lakh crore to the government, up from ₹2.1 lakh crore a year ago, giving the Centre a fiscal space of 0.12% of payout was higher despite an increase in the contingency risk buffer (CRB) to a maximum 7.5% of the RBI's balance sheet under a revised economic capital framework (ECF).'Earnings on FCA improved significantly on account of better returns on the dollar,'' said Dipanwita Mazumdar, economist at Bank of Baroda . 'This becomes critical given that our forex reserves held by the RBI have been increasing and are being invested in various avenues.''Interest income from investments in foreign securities was up 48% to ₹97,007 crore against ₹65,328 crore in FY24. The report also says that RBI's income from foreign exchange transactions rose 33% to ₹1.11 lakh crore in FY25, against ₹83,616 crore a year ago.'This ensures that the Centre meets its fiscal deficit target of 4.4% of GDP—if not exceed,' said Gaura Sengupta, chief economist, IDFC FY19, the RBI adopted the ECF that required the central bank to maintain a contingency risk buffer of 5.5–6.5%.'The dividend would have been even higher if the provisioning wasn't increased to 7.5% of total assets from 6.5% earlier,' said Sengupta. 'Indeed, if the provisioning was maintained according to the old framework, the dividend would have been ₹3.5 lakh crore.'Under the revised ECF, the CRB is 4.5–7.5% of the central bank's balance sheet.'The dividend announcement, though lower than market expectation, was still larger than the budgeted estimate by 0.15% of GDP,'' said Anubhuti Sahay, Head of India Economics Research, Standard Chartered forward, domestic economic activity is expected to strengthen from the lows of the first half of FY25, said the annual report. The economic outlook is an important deciding factor in arriving at the CRB inflation is expected to ease and move further toward the legally mandated target in 2025–26, said the annual report. Monetary policy is committed toward achieving durable price stability, which is a necessary prerequisite for high growth on a sustained basis, said the Reserve Bank will undertake liquidity management operations in sync with the monetary policy stance and keep system liquidity adequate to meet the needs of the productive sectors of the economy, said the annual FY25, the RBI's total expenditure rose 7.76% to ₹69,714 crore, due to higher interest spends, printing of notes and employee expenditure also includes provisions toward the contingency fund and asset development fund (ADF). However, no provision was made toward amount of ₹44,861.70 crore was provided toward the contingency fund to maintain the Available Realised Equity at the level of 7.5% of the balance sheet. Accordingly, the balance in CF as on March 31, 2025, was ₹5.42 lakh crore, compared with ₹4.29 lakh crore as on March 31, size of the balance sheet increased by ₹5.78 lakh crore, or 8.2%, to ₹76.25 lakh crore. The increase on the assets side was due to a rise in gold holdings, domestic investments and foreign investments by 52%, 14.3% and 1.7%, the liabilities side, expansion was due to an increase in notes issued, revaluation accounts, and other liabilities by 6.03%, 17.32% and 23.31%, assets constituted 25.73% 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% of total assets as on March 31, 2025, against 23.31% and 76.69%, respectively, as on March 31, share of gold in net foreign assets increased to 12% as at end-March 2025 from 8.3% as at end-March 2024, mainly due to revaluation gains from gold credit to the government expanded during the year owing to the liquidity injection through purchase of G-secs via open market operations during January–March 2025.
Times of Oman
14-03-2025
- Business
- Times of Oman
Retail inflation to come below RBI's 4.4% estimates in Jan-Mar quarter at 3.8%: Report
New Delhi: Consumer price index (CPI) or retail inflation is likely to undershoot the Reserve Bank's target in the January-March 2025 quarter, opening more policy space for easing the policy rate, Bank of Baroda said. India's retail inflation significantly improved in February 2025, as the year-on-year Consumer Price Index (CPI) inflation rate stood at 3.61 percent, a decline of 65 basis points from the previous month. The retail inflation print fell below 4 per cent in February for the first time in six months, mainly due to a decline in vegetable prices. "We do not see major risks lurking for food inflation. However, one needs to be vigilant on account of hotter than expected summer, stickier international edible oil prices and risks from global inflationary policies," said Dipanwita Mazumdar, an economist at Bank of Baroda. As of now, the tide is in favour of a lower headline print emanating from a better Rabi harvest, better supply management strategies of the government, rangebound commodity prices, benign energy price outlook and lesser dependence of the CPI basket in terms of imported commodities. "Overall, we expect CPI to settle at 4.6 per cent in 2024-25, with our Q4 number at 3.8 per cent," added the economist. Headline CPI got the necessary comfort from food inflation at a crucial juncture when uncertainty on global inflation predominated. The sharp decline in inflation in February, particularly in food categories, was largely attributed to falling prices in key items like vegetables, eggs, meat and fish, pulses, and milk products. These price corrections have provided much-needed relief to households grappling with the high cost of living in recent months. Food prices remained a problem for Indian policymakers, who wish to sustainably bring retail inflation to 4 per cent. But the latest inflation data once affirms that inflation is under control. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The RBI had kept the repo rate elevated to keep inflation contained. The repo rate is the rate of interest at which the RBI lends to other banks.
Reuters
24-02-2025
- Business
- Reuters
Indian rupee to take cues from regional peers, bond traders eye liquidity moves
MUMBAI, Feb 24 (Reuters) - Persistent foreign portfolio outflows may keep the Indian rupee on the defensive this week with the currency taking cues from regional peers, while government bonds will react to liquidity infusions by the central bank. The rupee , rose slightly week-on-week to settle at 86.7125 against the U.S. dollar on Friday. While the local unit's near-dated realized volatility eased last week, persistent selling of domestic stocks by overseas investors has kept it under pressure, which traders reckon is likely to persist. Foreign investors have net sold over $11 billion of local equities over 2025 so far, contributing to the rupee being one of Asia's worst-performing currencies. Strong interventions by the Reserve Bank of India have reduced speculative positioning against the currency, but the trend continues to be one of steady depreciation, said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group. He expects the rupee to be in the 86.40 to 87.10 range in the near-term and weaken towards 88 over six months. Meanwhile, focus will be on the Reserve Bank of India's $10 billion 3-year dollar-rupee buy/sell swap on February 28. The swap follows a shorter-tenor $5 billion buy/sell swap conducted by the central bank last month as part of its measures to infuse liquidity in the banking system. U.S. personal consumption expenditure inflation data due on Friday will also be in focus to gauge the future path of the Federal Reserve's policy rates. Meanwhile, India's benchmark 10-year bond yield , which ended marginally higher at 6.7065% on Friday, should move in the 6.67% to 6.74% range this week, traders said. Over the last five weeks, the RBI bought 1 trillion rupees ($11.54 billion) of bonds via open market operations and another 388 billion rupees through secondary market purchases. It has also infused around 440 billion rupees through a dollar/rupee buy/sell swap and injected 1.83 trillion rupees via long-term repos. The focus should be towards maintaining durable liquidity, which has seen recent drain due to the rundown of FX reserves, said Dipanwita Mazumdar, an economist with Bank of Baroda. India's inflation is seen aligning with the target of 4%, which opens up space for monetary policy to address concerns on the growth front, members of the rate-setting committee said in the minutes of the latest meeting released on Friday. The RBI cut interest rates by 25 basis points at the February meeting. Foreign investors have turned sellers of government bonds over the last two weeks. ($1 = 86.6380 Indian rupees)
