The story so far
RBI’s Central Board decided to transfer ₹2.69 lakh crore to the government for 2024-25.
This is the highest ever transfer and 27% more than last year’s record ₹2.11 lakh crore.
What had the government budgeted for?
The government expected ₹2.56 lakh crore from RBI, banks, and insurance companies.
RBI alone transferred more than this amount, so total collections will be higher than budgeted.
Where does the RBI get its surplus?
RBI earns money from:
Seigniorage (difference between currency value and printing cost).
Interest on loans to government and banks.
Investments in foreign bonds and currency gains.
After covering expenses and buffers, RBI transfers leftover profits to the government.
What kind of buffer levels does the RBI maintain?
RBI keeps a Contingent Risk Buffer (CRB) as a safety net.
In 2019, CRB was set at 5.5-6.5% of RBI’s balance sheet.
Recently, the range widened to 4.5-7.5% from 2024-25.
RBI kept CRB at 7.5% for 2024-25, yet transferred a record surplus.
Have these transfers happened in the past without controversy?
No, there have been tensions between RBI and government over surplus transfers.
Former RBI officials criticized government pressure for large transfers.
In 2018, PM Modi reportedly compared RBI’s reserves to a “snake sitting on money.”
Some RBI leaders resigned amid these disputes.
The Jalan committee’s formula eased tensions by setting clear buffer guidelines.
Are such large transfers the new normal?
This year’s large transfer was due to high foreign exchange sales and earnings.
Such high earnings may not continue next year.
With a wider CRB range, RBI may transfer more or less depending on buffer decisions.
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