RBI Board Approves ₹2.69 Trillion Surplus Transfer To Govt, Raises CRB to 7.5%

The Central Board of Directors of the Reserve Bank of India today approved a record surplus transfer of ₹2.69 trillion to the Central Government for the accounting year 2024–25. This follows a transfer of ₹2.11 trillion in 2023–24. The latest amount is lower than what many economists had expected as the board raised the Contingent Risk Buffer to 7.50%.

“The transferable surplus for the year (2024-25) has been arrived at on the basis of the revised Economic Capital Framework (ECF) as approved by the Central Board in its meeting held on May 15, 2025,” the RBI said. 

The risk provisioning under the Contingent Risk Buffer under the revised framework has been set at 4.50-7.50% of the RBI’s balance sheet. 

The CRB was set at 5.50% during 2018-19 to 2021-22 due to the prevailing macroeconomic conditions and thereafter gradually raised to 6.50% for 2023-24. 

A key factor behind the surge in surplus is likely the central bank’s trading income from its aggressive intervention in the forex market.

The 2024–25 financial year saw exceptional volatility in the currency markets. On a gross basis, the RBI sold $398.71 billion—sharply higher than the $153.03 billion offloaded in the previous year and surpassing the earlier record of $212.57 billion in 2022–23. Gross purchases also hit a new high at $364.20 billion, reflecting intense two-way activity. This led to a net sale of $34.51 billion, the second-largest annual net outflow since the 2008–09 global financial crisis.
Trading profits in foreign exchange are calculated based on the difference between the historical average buy price of INR/USD exchange rate and the current rate for dollars sold.

Last week, the board reviewed the Economic Capital Framework, which is based on recommendations from the Bimal Jalan Committee.

The committee chaired by former RBI Governor Bimal Jalan in 2019 recommended that the RBI’s contingency risk buffer be maintained between 5.5% and 6.5% of the balance sheet, with a review every five years.

A higher surplus pay out this year will help the government in funding the fiscal deficit and is expected to improve liquidity conditions. The Budget for the current year has projected ₹2.56 trillion from the RBI surplus and dividend from public sector financial institutions.

The surplus transfer of ₹2.69 trillion accounts for 17.12% of the fiscal deficit of ₹15.69 trillion in 2025-26. The surplus transfer had accounted for 13.4% of the revised fiscal deficit of ₹15.70 trillion in 2024-25. 

It remains to be seen if the record transfer will lead to a cut in the government’s market borrowing in 2025-26. The Budget has projected a net market borrowing of ₹11.54 trillion through dated securities and nil through treasury bills in 2025-26.