The Reserve Bank of India’s (RBI) unprecedented dividend payout of approximately ₹2.7 trillion to the government was largely fueled by aggressive dollar sales, significant foreign exchange gains, and a steady increase in interest income, according to a report by the State Bank of India (SBI).
SBI highlighted the RBI’s active role in the forex market as a key driver behind this massive surplus. In fact, the central bank was the largest seller of foreign exchange reserves among its Asian counterparts 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, as quoted by ANI.
Over the past year, the RBI undertook a series of decisive interventions to stabilize the rupee, including large-scale offloading of U.S. dollars. After India’s forex reserves hit a peak of $704 billion in September 2024, the central bank began intervening to curb excessive volatility in the currency markets.
By February 2025, gross dollar sales had soared to $371.6 billion—more than double the $153 billion recorded during FY24. These interventions not only stabilized the rupee but also generated substantial forex profits, which contributed heavily to the record dividend.
In addition to forex gains, the RBI’s interest earnings from rupee-denominated securities also increased. Holdings in these instruments rose by ₹1.95 lakh crore to ₹15.6 lakh crore as of March 2025. Despite lower mark-to-market (MTM) gains due to falling government securities (G-sec) yields, overall interest income remained robust.
SBI praised the RBI’s prudent financial management, noting that the surplus transfer could have been even larger—possibly exceeding ₹3.5 trillion—if the central bank had not opted to enhance its risk buffer.
The Contingent Risk Buffer (CRB), a financial safeguard against unexpected shocks, was maintained within the 5.5% to 6.5% range of the RBI’s balance sheet. This decision aligns with recommendations from the RBI’s Central Board and reflects the central bank’s cautious stance under the revised Economic Capital Framework (ECF). The surplus was approved during a board meeting on May 15, 2025.
This windfall offers a major boost to government finances. The Union Budget for FY2025-26 had projected a total dividend income of ₹2.56 lakh crore from the RBI and other state-run financial institutions. With the latest payout, the actual figure will significantly surpass those estimates.
