The Reserve Bank of India (RBI) has successfully navigated troubled waters, turning a potentially adverse year into one of advantage. Despite the currency’s value plunging to historic lows, the RBI managed to sell greenbacks from its chest to smoothen the slide and strengthen its own financial position. It raised its Contingent Risk Buffer (CRB) by 50 basis points to 6%, instead of transferring a massive surplus to the government as expected. RBI’s income rose 47% to ₹2.35 lakh crore, driven by its interventions in the currency market, resulting profits healthy, with the highest gains transferred to the Contingency Fund and the government. With more volatile financial markets anticipated amid bank blow-ups in the US, the RBI is preparing for upcoming operational, monetary, and credit risks by maintaining sufficient headroom through the risk-provisioning mechanism. Foreign exchange reserves that fell more than $100 billion from their peak are back near the $600 billion mark, strengthening the RBI’s position.
The Reserve Bank of India (RBI) is the central banking institution of India, established on April 1, 1935, under the Reserve Bank of India Act, 1934.
Anubhuti Sahay is an economist at Standard Chartered, while Radhika Rao is an economist at DBS. A Prasanna is the head of research at ICICI Securities Primary Dealership, and Aurodeep Nandi is an economist at Nomura Securities.
