Mint Explainer: What does RBI’s record dividend payout to the government mean?
announced a record dividend payout of ₹2.1 trillion to the government for the fiscal ended 31 March 2024 (FY24). This is higher than the government’s budget estimate and analysts' expectation of ₹1 trillion, and 141% larger than the ₹87,416-crore dividend payout in FY23. The central bank has also raised the contingency risk buffer (CRB) to 6.5% from 6% in the previous year.
Mint explains the implications of the higher-than-expected dividend payout. The RBI has three major sources of income, all of which could have brought in more in FY24. It earns a significant portion of its income through interest from investments in foreign-currency assets.
These include bonds and treasuries, and deposits with other central banks and commercial banks in currencies such as the US dollar, euro, British pound, Australian dollar and Japanese yen. RBI data shows investment in foreign-currency assets increased to ₹$570 billion at the end of March 2024 from $510 billion a year earlier. Also read: RBI's huge surplus transfer: Largesse in need of an explanation The central bank may also have earned more from selling US dollars in forex markets.
According to RBI data, it sold dollars worth $153 billion and bought dollars worth $194 billion in FY24. However, this was less than the amount it sold and bought in FY23. The central bank’s gold holding also increased by around ₹63,500 crore in FY24 from the previous year, a revaluation of which could have increased its income as well.
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