The Central bank posted impressive results driven by strong foreign exchange operations in FY25. Income surged by 23% to Rs 3.38 lakh crore as compared with the previous fiscal year. Foreign currency assets and the sale of dollars in domestic markets were important sources of revenues.
The RBI had transferred a record Rs 2.7 lakh crore to the government compared to Rs 2.1 lakh crore in FY24. The said action led to an 8.2% expansion in the central bank's balance sheet, from Rs 70 lakh crore to Rs 76 lakh crore. These striking figures are evidence of astute financial management amid global economic uncertainties.
RBI's total income witnessed a 23% increase, amounting to Rs 3.38 lakh crore, the prime driver being huge profits from foreign operations. Overall interest income went up by 12% to Rs 2.11 lakh crore, while other income rose by 47% to Rs 1.28 lakh crore, the surge being based on increased profits from foreign-exchange transactions. Interest earnings from overseas assets recorded strong growth, climbing up by 29% and touching Rs 1.33 lakh crore. The rise was largely on account of gains from foreign currency assets and strategic dollar sales in the domestic market.
RBI's balance sheet grew 8.2% to Rs 76 lakh crore with higher gold holdings as global uncertainty boosted safe-haven demand. The central bank used part of the money to strengthen financial buffers. The Contingency Fund rose by 27% to Rs 5.42 lakh crore following a Rs 44,862 crore provision to align Available Realized Equity with the 7.5% target under the Economic Capital Framework. This rose nearly 25% to Rs 5.72 lakh crore while the Asset Development Fund remained unchanged at Rs 22,975 crore.
Domestic earnings, however, declined compared to international operations. Interest income from local investments dropped nearly 10% to Rs 77,327 crore, largely due to lower returns from rupee securities. Income from domestic operations fell by 20% to Rs 2,143 crore. Total expenditure, on the other hand, went up by 8% to Rs 69,714 crore, mainly on account of higher costs for printing currency and employee benefits.
Exceptional forex operations showcase the strategic finesse of currency management in times of global uncertainties. The central bank could selectively take advantage of market opportunities while building financial resilience.
This record transfer to the government provides vital fiscal support as the economy faces many challenges. This sizable contribution strengthens government finances in times of uncertainty.
A strategic balance between distribution of profits and strengthening of buffers ensures long-term viability of the institution. The RBI's approach equips the central bank appropriately to face future challenges in the economic sphere.