MUMBAI, May 29 (Reuters) - The Indian central bank's gains from foreign exchange transactions surged nearly 33% to 1.11 trillion rupees ($13 billion) in the fiscal year ending March, pushing up its income sharply, its annual report showed on Thursday.

The Reserve Bank of India's net income rose to 2.69 trillion rupees, up 27.5% on year. Interest income from foreign securities also saw a sharp rise to 970.07 billion rupees from 653.28 billion rupees in the previous year.

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The size of the RBI's balance sheet grew 8.2% to 76.25 trillion rupees.

"In FY25, the surge in dollar selling was due to FY25 balance of payments turning negative," said Gaura Sen Gupta, chief economist at IDFC First Bank.

"In FY26, we expect balance of payments to be a small positive. Hence the quantum of dollar selling is expected to be moderate."

Last week, RBI's board approved the transfer of a record 2.69 trillion rupees as surplus to the government for last fiscal year as it opted to raise its contingency risk buffer under a revised economic capital framework.

In fiscal year 2019, the RBI adopted a new economic capital framework that required it to maintain a contingency risk buffer of 5.5% to 6.5% of its balance sheet.

Last week, the board changed the range of the contingency risk buffer to 6% plus or minus 1.5 percentage points to provide adequate flexibility and to ensure smoothening of surplus transfer.

IDFC Bank's Sen Gupta expects the RBI's dividend for this fiscal year to remain similar to levels seen in the previous two years, as interest income will remain substantial and provisioning stable.

For the last fiscal, the RBI's total expenditure rose 7.76% to 697.14 billion rupees, largely due to higher interest spends, and costs related to employees and printing of notes.

GROWTH FOCUS

Monetary policy is committed towards achieving durable price stability, which is necessary for high growth on a sustained basis, the RBI reiterated in the annual report.

"The benign inflation outlook and moderate growth warrant monetary policy to be growth supportive, while remaining watchful about the rapidly evolving global macroeconomic conditions," it said.

The central bank will undertake liquidity management operations in sync with the monetary policy stance and keep system liquidity adequate to meet the needs of the productive sectors of the economy, it said.

Banks should manage trading and banking book risks proactively amid heightened global uncertainties, and in light of a moderation in net interest margins, it said.

($1 = 85.5700 Indian rupees)

https://www.reuters.com/world/india/india-central-banks-net-income-surges-fy25-fx-gains-rise-2025-05-29/