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The Indian central bank's net income rose to 2.35 trillion rupees ($28.4 billion) in fiscal year 2023, from 1.6 trillion rupees in the previous year on higher forex gains, its annual report released on Tuesday showed.

The Reserve Bank of India's (RBI) balance sheet size increased by 2.5% during the financial year to 63.45 trillion rupees.

During the year, the central bank saw a gain of 1.03 trillion rupees from foreign exchange transactions, which allowed it to increase the size of its contingency fund, the report showed.

The RBI transferred 1.3 trillion rupees to its contingency risk buffer, raising the size of this buffer to 6% of its balance sheet from 5.5% previously.

Following this, it transferred a surplus of 874.16 billion rupees to the Indian government.

In 2018-19, the RBI adopted a new Economic Capital Framework, under which it is required to maintain a contingency risk buffer of 5.5-6.5% of its balance sheet.

The new framework also allows the central bank to benchmark sales of foreign exchange to its historical average cost of acquiring these reserves, allowing it to realise gains on foreign exchange transactions during the year.

In contrast, the central bank booked a loss of 17 billion rupees on the sale and redemption of foreign securities, likely due to the rise in yields in developed markets like the U.S. The central bank holds these securities as part of its reserves.