RBI's record Rs 2.7 trillion dividend fueled by US dollar sell offs and forex gains: SBI

The Reserve Bank of India’s historic dividend payout of approximately Rs 2.7 trillion to the government was fueled by strong sales of US dollar, a high foreign exchange gain and steady rise in interest income, State Bank of India said in its latest report.

The report said that RBI’s active participation in the forex market was a major contributor to this huge surplus. In fact, the central bank emerged as the biggest seller of foreign exchange reserves among Asian peers 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 noted, quoted by ANI.

Over the past year, the apex bank adopted a series of aggressive measures, including large scale sell offs of US dollars, as a part of its intervention strategy to stabilise Rupee. India’s forex reserves had peaked at $704 billion in September 2024. After this, the RBI began offloading large amounts of dollars to prevent excessive volatility in the currency markets.

The gross dollar sales reached a whopping $371.6 billion by February 2025, amounting well over double the $153 billion recorded during FY24. These drastic interventions helped the central bank book in substantial forex gains, contributing significantly to the dividend payout.

Alongside foreign exchange gains, the RBI also saw increased earnings from its holdings in rupee securities, which rose by Rs 1.95 lakh crore to Rs 15.6 lakh crore as of March 2025.

While falling government securities (G-sec) yields dampened mark-to-market (MTM) gains, overall interest income still recorded a healthy growth.

The SBI report praised the central bank’s prudent approach to maintaining financial stability. It further added that the surplus transfer could have soared even higher, possibly crossing Rs 3.5 trillion, had the central bank 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 per cent range of the RBI’s balance sheet in line with recommendations from the central board. The surplus was calculated under the revised Economic Capital Framework (ECF) and approved by the RBI’s Central Board during a meeting held on 15 May 2025.

This unexpected windfall comes as a major boost to the government’s finances. 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. With the latest payout, the actual figure will now comfortably exceed budget estimates.