The Reserve Bank of India (RBI) on Friday announced a record surplus transfer of Rs 2.87 lakh crore to the Centre for the accounting year 2025-26, marking a 6.7% increase over the previous year. The latest dividend payout was largely in line with the government’s Budget Estimates, but fell slightly short of analyst expectations.
The RBI set aside a higher amount for its contingency risk buffer (CRB) for 2025-26, as its balance sheet expanded more than a fifth year-on-year. This could strengthen its position to intervene in the financial market this year, in response to evolving domestic and global macroeconomic conditions.
The transfer from the central bank to the Union Budget will be the highest as a share of the government’s non-tax revenue at 43% and will account for 5.4% of the budget estimates for 2026-27. RBI dividend emerged as a key source of non-tax revenue for the Centre in recent yeras, with its share rising sharply from 10.6% in 2022-23.
The RBI decided to maintain the CRB for 2025-26 at 6.5% of its balance sheet, compared to 7.5% for 2024-25. Under the RBI’s Economic Capital Framework (ECF), the CRB can be maintained within a range of 4.5% to 7.5%.
“Taking into consideration the current macroeconomic factors, financial performance of the Bank and maintenance of appropriate risk buffers, the Central Board decided to transfer Rs 1,09,379.64 crore towards the CRB for 2025-26 as against Rs 44,861.70 crore in the previous year, and maintain the CRB at 6.5% of the size of the RBI balance sheet,” the central bank said in a statement.
The RBI’s balance sheet expanded 20.61% on year to Rs 91,97,121.08 crore as of March 31, 2026.
India Ratings chief economist Devendra Kumar Pant said the robust surplus transfer, along with the proposed Fiscal Stabilisation Fund of Rs 1 lakh crore and expenditure control measures, could help contain the fiscal deficit in FY27. The Centre has set a fiscal deficit target of 4.3% of GDP for FY27, though higher subsidy spending on fertiliser and fuel due to the West Asia conflict is likely to exert pressure on government finances and stretch the fiscal deficit. “Higher transfer will reduce some pressure on the fiscal deficit arising from the geopolitical situation,” Pant said.
The marginal increase in non-tax revenues will be useful to partly neutralise some of the expected increase in government subsidies, including food, fertilizer and petroleum subsidies in the wake of the ongoing West Asian crisis, said DK Srivastava, Chief Policy Advisor, EY India
“Based on past trends, dividends may surpass Rs 3 lakh crore next year. System liquidity will improve as government spending could increase,” said Madhavankutty G, chief economist at Canara Bank.
TOPICSRBIThis article was first uploaded on May twenty-two, twenty twenty-six, at fifteen minutes past eleven in the night.