RBI Approves Record INR 2.69 Trillion Surplus Transfer to Government Amid Wider Risk Buffer This is the second consecutive year the RBI has transferred a record surplus. In FY24, it had remitted INR 2.11 trillion to the Centre while maintaining a 6.5 per cent CRB
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The Reserve Bank of India (RBI) on Friday announced a record surplus transfer of INR 2.69 trillion for the financial year 2024-25. The decision, made during a meeting of the central board, came even as the RBI raised its contingent risk buffer (CRB) to the upper limit of a newly expanded range under a revised Economic Capital Framework (ECF).
According to information released by the RBI, the CRB has now been broadened from the earlier 5.5-6.5 per cent range to 4.5-7.5 per cent of the central bank's balance sheet, providing more flexibility in managing risks and future payouts. The buffer for FY25 has been pegged at 7.5 per cent—the highest end of the new band.
This is the second consecutive year the RBI has transferred a record surplus. In FY24, it had remitted INR 2.11 trillion to the Centre while maintaining a 6.5 per cent CRB. The transferable surplus is calculated based on the ECF adopted in 2019, following the recommendations of the Bimal Jalan-led Expert Committee. As per the framework, the RBI must undertake a review every five years, which culminated in the current revisions.
"Based on the revised Economic Capital Framework, and taking into consideration the macroeconomic assessment, the Central Board decided to further increase the CRB to 7.50 percent," the RBI said in its statement.
Despite the increased provisioning, the central bank's higher surplus this year was made possible by substantial profits from aggressive dollar sales. Gross foreign exchange sales hit $399 billion in FY25, sharply up from $153 billion the previous year. On a net basis, the RBI sold $34.5 billion—its highest since the 2008-09 global financial crisis—capitalizing on the lower historical cost of its dollar reserves versus prevailing market rates.
Market expectations, however, had leaned towards an even higher transfer, closer to INR 3 trillion, had the CRB been retained at last year's level. Still, the RBI emphasized the need for balance.
"The revised ECF provides requisite flexibility year-on-year... while also ensuring needed inter-temporal smoothing of the surplus transfer to the government," the RBI noted, underlining the framework's resilience against evolving external and domestic risks.
The central bank's annual report, due shortly, will provide a detailed breakdown of this year's balance sheet, including the exact composition of the Available Realised Equity (ARE), which stood at INR 4.58 trillion, or 6.5 per cent of the balance sheet, in FY24.
