Background

• According to Section 47 of the RBI Act, profit of the RBI has to be transferred to the government periodically.
• However, before transferring, some amount of the profit is kept aside for maintaining reserves of the RBI.

What constitutes RBI’s reserves?

• RBI’s reserves fall under four main heads: the Contingency Fund (CF), the Currency and Gold Revaluation Account (CGRA), the Asset Development Fund (ADF) and the Investment Revaluation Account (IRA).
• CF is the corpus created to take care of unexpected and unforeseen contingencies, including depreciation in the value of securities held, systemic risks and risks arising out of monetary and exchange rate policy operations. 
• The ADF corpus is meant to be drawn upon for investments in subsidiaries and to meet internal capital expenditure etc.
• Of these, the CGRA and the IRA are ‘notional’ in the sense that they are there to reflect the movements in the market prices of the asset classes (mainly gold, foreign currency and investments) to which they relate. 
• No cash flow is involved in their case and the net credit balance in the CGRA account only indicates the unrealised or potential gain from the disposal by sale of those assets today.

Why in News?

• The Central Board of Directors of the Reserve Bank of India (RBI) has approved the transfer of a record ₹2,10,874 crore as surplus to the Union government for the accounting year 2023-24.
• The latest transfer by the central bank is more than double the ₹87,416 crore that the RBI had transferred in FY23.
• The Board also decided to increase the Contingent Risk Buffer (CRB) to 6.50% for 2023-24, from 6% in the previous year.

https://www.thehindu.com/business/rbi-board-approves-transfer-of-210874-crore-surplus-to-centre-for-fy24/article68203941.ece#:~:text=In%20a%20windfall%20gain%20for,the%20accounting%20year%202023%2D24.