RBI’s Economic Capital Framework: surplus and risk buffer

18 May 20251 min read

Why in the news

The RBI board met on May 15, 2025 to decide if the Economic Capital Framework needs changes.

The RBI’s risk management policy: sets capital and reserves needed for financial stability, and the surplus transferable under Section 47, RBI Act, 1934.
Contingency Risk Buffer (CRB): cushion for monetary, credit, fiscal and operational risks; range 5.5%-6.5% of balance sheet; 6.5% on March 31, 2024.
Total economic capital includes paid-up capital, reserves, risk provisions and revaluation balances.

The Bimal Jalan Committee (2018) set the guidelines, valid till June 2024.
Higher CRB: more stability, smaller surplus. Lower CRB: bigger transfers but more risk.
Surplus funds infrastructure, subsidies and welfare.

1. Under which provision of the RBI Act, 1934 does the RBI transfer its surplus to the Government of India?

The ECF notes link surplus transfers to Section 47 of the RBI Act, 1934.

2. Which committee set the present Economic Capital Framework guidelines in 2018?

The Bimal Jalan Committee (2018) reviewed the ECF and set the current guidelines.

3. How much surplus did the RBI transfer to the government in FY24, the highest ever then?

FY24 transfer was ₹2.11 lakh crore, the highest ever at that time.

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