The Reserve Bank of India (RBI) has made a historic dividend payout of approximately Rs 2.7 trillion to the government, fueled by strong sales of US dollars, high foreign exchange gains, and steady rises in interest income. According to a report by the State Bank of India (SBI), the RBI’s active participation in the forex market was a major contributor to this huge surplus. The central bank emerged as the biggest seller of foreign exchange reserves among Asian peers in January 2025, with gross dollar sales reaching $371.6 billion by February 2025.
The RBI’s intervention strategy to stabilize the Rupee involved large-scale sell-offs of US dollars, which helped the central bank book substantial forex gains and contributed significantly to the dividend payout. The bank’s holdings in rupee securities also rose by Rs 1.95 lakh crore to Rs 15.6 lakh crore as of March 2025, resulting in increased earnings. While falling government securities yields dampened mark-to-market gains, overall interest income still recorded a healthy growth.
The SBI report praised the central bank’s prudent approach to maintaining financial stability, noting that the surplus transfer could have been even higher if the RBI had not decided to raise its risk buffer. The Contingent Risk Buffer (CRB), a safety net for unforeseen shocks, was kept within the 5.5 to 6.5 percent range of the RBI’s balance sheet. The surplus was calculated under the revised Economic Capital Framework (ECF) and approved by the RBI’s Central Board.
This unexpected windfall is a major boost to the government’s finances, with the actual dividend income exceeding budget estimates. The Union Budget for 2025-26 had projected a total dividend income of Rs 2.56 lakh crore from the RBI and state-run financial institutions, but the latest payout will comfortably exceed this figure. The RBI’s dividend payout is a significant development, demonstrating the central bank’s ability to generate substantial income and support the government’s finances. The payout is also a testament to the RBI’s effective management of the country’s foreign exchange reserves and its commitment to maintaining financial stability.