RBI Approves Record Surplus Transfer of ₹2.6 Lakh Crore to Government for 2024-25

RBI's Surplus Transfer to Union Government

On Friday, the board of the Reserve Bank of India (RBI) sanctioned a substantial transfer of ₹2.6 lakh crore as surplus to the Union government for the fiscal year 2024-25.

Each year, the central bank distributes a dividend to the government derived from its surplus or profits, which acts as a vital revenue stream for governmental finances.

This marks the highest annual surplus ever transferred by the central bank to the government, as reported by various news sources.

The transfer occurs in the context of global financial instability and ongoing trade discussions with the United States, which may negatively impact future customs duty revenues.

In light of the economic forecast, the RBI board has also opted to increase the Contingency Risk Buffer to 7.5%.

This buffer is a reserve fund held by the RBI primarily for emergency situations.

Previously, the buffer was maintained at 5.5% of the balance sheet from 2018-19 to 2021-22 to bolster the economy during challenging times and mitigate the effects of the Covid-19 pandemic.

As economic conditions improved in 2022-23, the buffer was raised to 6%, and subsequently to 6.5% for the fiscal year 2023-24.