(MENAFN- KNN India) New Delhi, May 24 (KNN) The Reserve Bank of India's (RBI) unprecedented dividend payout of nearly Rs 2.7 trillion to the government has been primarily enabled by robust gross dollar sales, substantial foreign exchange gains, and consistent growth in interest income, according to a report by the State Bank of India (SBI).

The report attributes the substantial surplus transfer to the RBI's proactive engagement in the foreign exchange market.

Notably, the central bank emerged as the largest seller of foreign exchange reserves among Asian central banks in January 2025.

“This surplus payout is driven by robust gross dollar sales, higher foreign exchange gains, and steady increases in interest income,” the report stated.

To stabilise the rupee, the RBI undertook aggressive interventions, including large-scale dollar sales throughout the year.

India's foreign exchange reserves had peaked at $704 billion in September 2024.

Following this, the RBI significantly offloaded dollars to maintain currency stability. Gross dollar sales during the ongoing financial year, up to February 2025, amounted to $371.6 billion-more than double the $153 billion sold in FY24. These actions contributed to notable foreign exchange gains, bolstering the RBI's surplus.

In addition to gains from forex operations, the RBI also recorded higher income from its rupee securities portfolio.

As of March 2025, the central bank's holdings in rupee securities had increased by Rs 1.95 lakh crore to Rs 15.6 lakh crore.

While a decline in government securities (G-sec) yields affected mark-to-market (MTM) gains, overall interest income continued to rise steadily.

The report also underscored the RBI's cautious approach in preserving financial stability.

Despite the sizeable payout of Rs 2.7 trillion, the amount could have exceeded Rs 3.5 trillion had the central bank not opted to strengthen its risk buffer.

The Contingent Risk Buffer-designed to protect against future contingencies-was maintained within a range of 7.5 to 4.5 per cent of the RBI's balance sheet, in line with recommendations from the central board.

The transferable surplus was calculated under the revised Economic Capital Framework, approved by the RBI's Central Board during its meeting on May 15, 2025.

This substantial transfer represents a fiscal 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 payout, the actual inflow will significantly exceed budget estimates.

(KNN Bureau)

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