Chapter IV — General Provisions

Section 47: Allocation of surplus profits

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 47 governs allocation of RBI's annual surplus after making provision for bad/doubtful debts, depreciation, staff/superannuation and other matters for which provision is usually made by bankers, with the balance payable to the Central Government.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 47 in 2 minutes

Legal effectSection 47 governs allocation of RBI's annual surplus after making provision for bad/doubtful debts, depreciation, staff/superannuation and other matters for which provision is usually made by bankers, with the balance payable to the Central Government.

Operative ruleThe statutory surplus-transfer rule operates after necessary provisions and is distinct from the Reserve Fund and RBI's capital.

Connected lawCurrent economic-capital/reserve policy may affect how RBI determines prudent provisions, but the legal transfer ultimately sits within Section 47.

File evidenceFor analysis, reconcile audited income, provisions/reserves, transferable surplus and the amount paid to Government.

Statutory structure and clause / subsection decode

This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.

Scope

Operative limb

The statutory surplus-transfer rule operates after necessary provisions and is distinct from the Reserve Fund and RBI's capital.

Legal boundary

Current economic-capital/reserve policy may affect how RBI determines prudent provisions, but the legal transfer ultimately sits within Section 47.

Worked practical example

Facts. A headline 'RBI dividend' should be described accurately as transfer of surplus under the statutory framework rather than as an ordinary company dividend to a shareholder.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 47 and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. Current economic-capital/reserve policy may affect how RBI determines prudent provisions, but the legal transfer ultimately sits within Section 47.
Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.

Connected provisions and instruments

Section 47 has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.

Questions and answers

What is the purpose of Section 47?

Allocation of surplus profits: Section 47 governs allocation of RBI's annual surplus after making provision for bad/doubtful debts, depreciation, staff/superannuation and other matters for which provision is usually made by bankers, with the balance payable to the Central Government.

Which statutory limb should be checked first?

Scope - Section 47 governs allocation of RBI's annual surplus after making provision for bad/doubtful debts, depreciation, staff/superannuation and other matters for which provision is usually made by bankers, with the balance payable to the Central Government.

What is the next legal boundary?

Operative limb - The statutory surplus-transfer rule operates after necessary provisions and is distinct from the Reserve Fund and RBI's capital.

What record should support the conclusion?

Section 47 file evidence: For analysis, reconcile audited income, provisions/reserves, transferable surplus and the amount paid to Government.

Primary sources

Source control for Section 47: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.