RBI's Annual Surplus Transfer Could Reach Rs 3 Lakh Crore

The Reserve Bank of India's (RBI) central board of directors is gearing up for a pivotal meeting on May 23 to review the central bank's balance sheet and deliberate on the transfer of surplus funds for FY25 to the government. This year's payout is anticipated to hit a staggering Rs 3 lakh crore, marking a near 50% increase from the previous year's dividend.

Economic Capital Framework Review

Prior to this, the board convened on May 15 to assess the Economic Capital Framework (ECF), a key determinant in calculating the surplus or dividend. "We estimate an RBI dividend ranging from Rs 2.6 lakh to Rs 3 lakh crore, contingent on the level of provisioning," remarked Gaura Sen Gupta, chief economist at IDFC First Bank.

Market Expectations and Impact

"The financial markets have largely priced in a dividend of around Rs 2.5 lakh crore. Any positive deviation from this figure could influence bond yields," noted Alok Singh, group treasury head at CSB Bank.

Contingency Provisions and Risk Buffer

Contingency provisions are expected to match or exceed last year's figures, with projections between Rs 40,000 - Rs 80,000 crore. The Contingent Risk Buffer (CRB) recommendations suggest maintaining risk provisioning within 6.5-5.5% of the RBI's balance sheet, closely tied to the economy's growth trajectory.

Additionally, the final dividend amount will also hinge on the central bank’s domestic earnings. Stay updated with the latest in business news and opportunities for skill enhancement.