RBI Dividend Update

For the financial year 2024–25, the Reserve Bank of India (RBI) has announced a substantial transfer of ₹2.69 lakh crore to the Union Government as surplus, commonly referred to as a dividend.

Understanding Dividends in Public Finance

In the realm of public finance, a dividend signifies a share of profits distributed by an institution to its stakeholder—in this case, the Government of India, which is the sole owner of the RBI.
Such dividends constitute a significant component of non-tax revenue for the government and contribute to narrowing the fiscal deficit.

These transfers are carried out under the provisions of the Reserve Bank of India Act, 1934, and require the endorsement of the RBI’s Central Board.
While dividend payments in private companies typically need shareholder consent, the RBI’s dividend distribution follows a policy-driven institutional framework.

The dividend yield, an indicator of the income return on an investment, is calculated using the formula:
Dividend Yield = (Annual Dividend per Share) ÷ (Current Share Price)

Why Was RBI’s Surplus Higher in FY 2024–25?

Several factors contributed to the increased surplus for 2024–25:

• A significant rise in the sale of foreign exchange reserves, particularly in January 2025, when the RBI emerged as the leading seller among Asian central banks.
• Enhanced interest earnings from both government securities and overseas investments.
• Profits from foreign exchange transactions due to fluctuations in global financial markets.

The ₹2.69 lakh crore dividend reflects a 27% increase from the ₹2.10 lakh crore transferred in the preceding year (2023–24), highlighting a notable boost in RBI’s revenue.

This surplus has been assessed and transferred in accordance with the Revised Economic Capital Framework (ECF), adopted on May 15, 2025. The ECF outlines the guidelines for determining the amount of surplus the RBI can prudently transfer while maintaining adequate capital reserves to mitigate financial risks.