Mumbai: The Reserve Bank of India (RBI) on Friday announced a record dividend payout of ₹2.87 lakh crore to the central government for the accounting year 2025-26, a 7 per cent increase compared to Rs 2.69 lakh crore paid for 2024-25. However despite the record dividend, economists do not expect a major fiscal boost owing to expectations of higher fertilizer and fuel subsidy requirements, lower tax collections and dividends from oil marketing companies. The payouts were Rs 2.10 lakh crore in 2023-2024 and Rs 87,416 crore for 2022-23.
Says Aditi Nayar, chief economist, ICRA Ltd, “As compared to the Budget Estimates, the fisc is expected to remain under pressure owing to expectations of higher fertilizer and fuel subsidy requirements, and lower tax collections and OMC dividends.”
“While the Economic Stabilisation Fund and customs duty hikes on gold and silver imports are likely to provide some cushion, we expect the government of India to exceed the budgeted fiscal deficit target for FY2027 of 4.3 per cent of GDP by 40 basis points assuming an average crude oil price of $95/barrel in the fiscal,” added Nayar.
The central bank cut the Contingent Risk Buffer (CRB) to 6.5 per cent from 7.5 per cent but more than doubled the provisioning to Rs one lakh crore to 21 per cent year on year expansion in the RBI balance sheet in FY26.
According to Budget documents, the Union government has projected dividend and surplus receipts of ₹3.16 lakh crore from RBI, public sector banks (PSBs) and financial institutions during FY26-27. The RBI’s payout alone accounts for a substantial portion of that estimate.
“The record dividend was likely driven by higher G-Sec interest income and robust forex earnings from around $180 billion of forex sales helping offset higher provisioning and Mark to Market losses,” said Madhavi Arora, lead economist at Emkay Global.
The central bank annually pays out a surplus to the government. This amount is determined after accounting for provisioning for bad loans, asset depreciation, employee benefits, and other statutory expenses under the RBI Act. The RBI dividend/surplus is an important source of revenue for the government especially as it provides a buffer to make up for a miss in taxes or disinvestment receipts, or higher-than-budgeted expenditure in the fiscal. It helps the government boost its fiscal position.
The RBI’s balance sheet expanded 20.61 per cent to ₹91 lakh crore as of March 31, 2026.
The revised Economic Capital Framework (ECF) provides flexibility to maintain the Contingent Risk Buffer (CRB) between the range of 4.5 per cent and 7.5 per cent of the size of the RBI Balance Sheet.
“Taking into consideration the current macroeconomic factors, financial performance of the Bank and maintenance of appropriate risk buffers, the Central Board decided to transfer ₹1,09,379.64 crore towards the CRB for FY 2025-26 as against ₹44,861.70 crore in the previous year, and maintain the CRB at 6.5 per cent of the size of the RBI Balance Sheet,” said the RBI.
The decision was taken at the 623rd meeting of the RBI’s central board of directors held in Mumbai under the chairmanship of governor Sanjay Malhotra.
According to the RBI, the central bank’s gross income rose 26.42 per cent year-on-year (Y-o-Y) during FY25-26, while expenditure before risk provisions increased 27.6 per cent. Net income before risk provisions and transfer to statutory funds stood at ₹3.95 lakh crore for FY25-26, compared with ₹3.13 lakh crore in the previous financial year.
The central board also reviewed global and domestic economic conditions and discussed risks to the macroeconomic outlook.
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