RBI’s Dividend To The Government Remain Same

The dividend that the Reserve Bank of India (RBI) transfers to the Central government in FY25 will likely be in the same range as the last fiscal (FY24), The projected dividend for the Central Government from Public Sector Banks (PSBs) in FY2025 is anticipated to exceed the previous fiscal year’s dividend. This increase stems from the higher profits reported by public sector banks in FY24 compared to the preceding year. Profits of state-owned banks have crossed Rs.90,000 crore in the first three-quarters of FY2024 and are likely to exceed Rs.1.3 trillion by FY24 end. 

Centre expects constant dividend income from RBI

The Central Government anticipates maintaining the same dividend income from the Reserve Bank of India (RBI) in FY25, compared to the previous fiscal year. In FY24, the government aimed for a 17% higher dividend, setting the target at Rs.48,000 crore from the RBI, public sector banks, and financial institutions.

Surpassing these expectations, the Reserve Bank of India transferred Rs.87,416 crore as surplus to the Central government for FY2023, exceeding the set target. This surplus was transferred by them in May 2023 but it was  accounted for in FY2024 by the government,

This time the government aims for consistency or a marginal growth in dividend income from the RBI for FY25, This reflects the government’s prudent fiscal management and reliance on stable revenue sources.

The government expects Rs.1.02 Trillion from RBI in FY2025

According to the budget which was posted in February, the government expects Rs.1.02 trillion in dividends from the RBI and state-owned banks without specifying a breakdown for the same. 

However, actual dividends from the Reserve Bank of India might surpass the budgeted target, similar to last year when the actual dividend proceeds exceeded the budgeted target. This will also help the government to stick to its fiscal deficit path and bring it down to 5.1% in FY25. 

Conclusion: The income of the Reserve Bank of India has seen a rise over the last couple of years, this has majorly factored by the interest income from holding the securities both domestic and foreign and the loans provided to commercial banks, The dividend payout by the Reserve Bank of India is expected to remain strong, this, if exceeded the budgeted target, will further help the government to bring down its fiscal deficit to the targeted level of  5.1% in FY25, The government is on a path to reduce the fiscal deficit below 4.5% by FY26, adhering to that path fiscal deficit for FY25 is targeted to be at 5.1%.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.