RBI dividend likely to stay at FY24 level
The dividend that the Reserve Bank of India (RBI) transfers to the central government in FY25 will likely be in the same range or slightly more than in the previous fiscal (FY24), two people aware of the matter said.
Meanwhile, the dividend that the Centre will receive from public sector banks (PSBs) during FY25 could be higher than what it received in FY24 as profits reported by stateowned banks were higher in FY24, compared with the previous year, the people mentioned above said.
Profits of state-owned banks crossed ₹98,000 crore in the first three-quarters of FY24 and are likely to exceed ₹1.3 trillion by FY24-end.
“The Centre expects dividend income from the RBI during FY25 to remain consistent, at the same level or slightly more compared with the last year,” the first person mentioned above said, requesting anonymity.
“The dividend from PSBs are expected to be over ₹15,000 crore during FY25,” the person added. Dividend from the RBI is usually released to the Centre in May.
During FY24, the government had pegged a 17% higher dividend at ₹48,000 crore from the RBI, public sector banks and financial institutions.
However, this target was surpassed with the transfer of ₹87,416 crore as surplus to the Central government for FY23 by the RBI, which was paid in May 2023 and accounted for in FY24 by the government. The dividend payout from public sector banks for FY24 has been about ₹15,000 crore.
The vote on account budget presented in February states that the government expects ₹1.02 trillion in dividends from the RBI and state-owned banks in FY25 but doesn’t give a breakup.
Meanwhile, the actual dividend from RBI and state-owned banks could exceed the budgeted targets during FY25 and help the Centre stick to its fiscal deficit glide path and bring down the fiscal deficit to 5.1% in FY25 or even better it, said the second person mentioned above.
“There is a likelihood that the dividend income will be higher than the provisions made in the vote on account budget, similar to last year when the actual dividend proceeds exceeded the budgeted target,” the person added.
Spokespersons of the finance ministry and RBI didn’t respond to emailed queries.
“Over the last couple of years, RBI’s income has seen a rise on account of its interest income from holding securities (both foreign and domestic) and on loans provided to commercial banks funding the Indian economy expansion and growth appetite,” said Anish Mashruwala, Partner, JSA Advocates and Solicitors.
“[G]iven the current geopolitical realities, I am bullish on India’s continued upward trajectory and though the upcoming election results will certainly have an impact on the pace of this trajectory, RBI’s dividend payout for FY25 will remain strong and with higher foreign capital inflows, should be higher,” he added.
rhik.kundu@livemint.com
PSBs’ profits beat ₹98,000 crore in the first three quarters of FY24 and may exceed ₹1.3 trillion by FY24-end