RBI Reviews Economic Capital Framework

On 15th May 2025, the Reserve Bank of India (RBI) announced that its Central Board had reviewed the Economic Capital Framework (ECF), the mechanism that governs surplus transfers to the government. A record dividend of ₹2.5–3 lakh crore is expected for FY25.

Key Points

ECF Review: The RBI board, chaired by Governor Sanjay Malhotra, held its 615th meeting in Mumbai to review the Economic Capital Framework.
Record Dividend Likely: Estimates suggest a record transfer of ₹2.5–3 lakh crore for FY25—surpassing the ₹2.11 lakh crore transferred in FY24.
Next Meeting: The RBI board is expected to meet again on May 23 to finalize the dividend amount for the accounting year 2024–25.
Fiscal Impact: A higher surplus will aid the government in managing its fiscal deficit and boost system liquidity, potentially reaching ₹6 lakh crore.
CRB Mechanism: The surplus is calculated after setting aside the Contingency Risk Buffer (CRB), maintained for financial stability and crisis management.
Earnings Boost: Strong FY25 earnings were driven by dollar sales, rising gold prices, and gains on government securities.
Jalan Committee Legacy: The ECF was adopted in 2019 based on recommendations from the Bimal Jalan committee, with a review cycle every five years.