RBI’s revised ECF: wider buffer range for smoother payouts
Why in the news
The RBI widened its risk buffer range to give itself room to even out surplus payouts without disturbing the government’s fiscal maths.
Key facts
- Wider range lets the RBI retain more in boom years and pay more in lean years.
- FY25 transfer of ₹2.69 trillion was the highest ever, despite CRB at 7.5%.
- Drivers: higher forex income (gross dollar sales $153 bn to $399 bn), more interest on government securities, lower revaluation provisions.
| Period | CRB |
|---|---|
| FY19-FY22 | 5.5% |
| FY23 | 6.0% |
| FY24 | 6.5% |
| FY25 | 7.5% |
Objectives
- Align buffers with emerging risks; smooth transfers across years.
- Keep the RBI resilient and credible amid global volatility.
Exam angle
- Concept: intertemporal smoothing.
- New upper limit: 7.5%.