Archive · 2 Jun 2025
RBI Modifies Reserve Rules for Dividend Flexibility
The Reserve Bank of India (RBI) has changed how much money it keeps in reserve to help manage the money it gives to the government.
The RBI can now set aside between 4.5% and 7.5% of its money.
This allows the RBI to give more money to the government when the economy isn't growing fast, helping the government spend more.
When the economy is doing well, the RBI can hold back more money to prevent problems.
The change is also needed because the RBI doesn't make as much money selling dollars as it used to.
This helps the RBI make smoother payments to the government, keeping the money flow steady.
RBI adjusted its contingent risk buffer (CRB) range to 4.5%-7.5% of liabilities.
The change allows for increased dividends to the government during slow economic growth.
The adjustment provides flexibility amid global economic uncertainties.
The change in CRB is needed because profits from selling forex reserves are declining.
The CRB flexibility helps smooth dividend payments to the government.
- Who
- The Reserve Bank of India (RBI).
- What
- RBI modified its reserve rules regarding the contingent risk buffer.
- When
- Earlier this month.
- Where
- N/A
- Why
- To ensure flexibility in dividend payments to the government and adapt to changing economic conditions.
- New CRB Range
- 4.5% - 7.5%
- Prior CRB Range
- 5.5% - 6.5%
- Average profit per dollar sold
- FY23 - ₹8
- Profit per dollar sold in FY25
- FY25 - ₹6.5
- Amount garnered by selling dollars
- ₹2.5-2.6 lakh crore
- Approximate value of dollars sold
- $400 billion