The central government may soon receive a substantial check of ₹3 lakh crore from the Reserve Bank of India (RBI). It is anticipated that during its upcoming board meeting, the RBI will approve this dividend for the Indian government. This financial boost could significantly aid the government's capital expenditure, especially at a time when it has exempted earnings up to ₹12 lakh from taxes, amidst expectations of a decline in tax revenue. Let's explore how this dividend could provide relief to the government and what news is circulating regarding the RBI and the market.

The RBI's central board is expected to convene on May 23 to conduct an annual review of the central bank's balance sheet and transfer surplus funds for the fiscal year 2025 to the government. This surplus could reach ₹3 lakh crore, representing an increase of nearly 50% compared to last year's dividend.

On May 15, the RBI board also met to review the Economic Capital Framework (ECF). This framework plays a crucial role in determining the surplus or dividend, which the RBI adopted in 2019. The relevant committee recommended maintaining the risk provision under the Contingent Risk Buffer (CRB) within the range of 6.5-5.5% of the RBI's balance sheet. Additionally, the dividend is influenced by income generated from various domestic sources by the central bank. The board makes decisions regarding the CRB based on the economic performance during the review period, which is directly linked to the growth of the economy over the year.

Market expectations have largely factored in a dividend of approximately ₹2.5 lakh crore, as noted by Alok Singh, head of group treasury at CSB Bank. Any increase in this figure could impact bond yields. The contingent provisions are expected to remain the same as or higher than last year. According to IDFC First Bank, the provision was ₹42,800 crore, and it is anticipated to range between ₹40,000 crore and ₹80,000 crore.

Market expectations have largely factored in a dividend of approximately ₹2.5 lakh crore, as noted by Alok Singh, head of group treasury at CSB Bank. Any increase in this figure could impact bond yields. The contingent provisions are expected to remain the same as or higher than last year. According to IDFC First Bank, the provision was ₹42,800 crore, and it is anticipated to range between ₹40,000 crore and ₹80,000 crore.