RBI’s Income

RBI’s Expenditure

·       Lends money to the Central government, State governments, and commercial banks with interest. 

·       Earns interest on its holdings of local rupee-denominated government bonds or securities.

·       Claims a management commission on handling the borrowings of state. governments and the central government.

·       Forex operations where the central bank buys and sells foreign currencies to stabilize the domestic currency. 

·       Returns on forex reserves. i.e. makes investments in other countries’ bonds

·       By the process of issuing currency called as Seigniorage. (The difference between the face value of a currency and the cost it took to produce that currency).

·       Costs related to printing currency notes

·       Salaries and benefits for staff

·       Commissions paid to banks for handling government transactions and underwriting public debt.

·       A large part of RBI’s spending goes into risk provisions, mainly the Contingency Fund (CF) and Asset Development Fund (ADF).

·       CF covers unforeseen risks like asset depreciation, while ADF funds investments in subsidiaries and internal capital needs.