RBI to transfer record ₹2.7 lakh crore dividend to government for FY surpassing budget estimates

The Reserve Bank of India (RBI) will transfer a record ₹2.7 lakh crore to the union government as a dividend for the current financial year, surpassing last year’s ₹2.1 lakh crore and exceeding both budget projections and official estimates.

The amount is greater than the ₹2.6 lakh crore the government expected to receive from the RBI, state-run banks, and financial institutions combined for FY26.

This substantial payout comes despite the central bank increasing its contingency risk buffer to 7.5% from 6.5% last year, reflecting a cautious stance amid global uncertainty and domestic financial risks.

The higher buffer required the RBI to retain a larger portion of its profits, suggesting the actual earnings were even higher.

The surplus transfer has been supported by increased income from foreign exchange sales, stronger returns on overseas assets, and gains from liquidity operations.

These factors allowed for the generous dividend, even as the RBI chose to reserve more of its earnings to bolster its financial resilience.

Analysts believe the transfer will ease fiscal pressure and help bring down borrowing costs.

“The RBI's dividend exceeds budget assumptions by around ₹40,000 crore to ₹50,000 crore, or 11–14 basis points of GDP,” said Aditi Nayar, chief economist at ICRA.

She noted that the funds provide the government with flexibility to manage revenue shortfalls or higher-than-expected expenditure.

Nayar added, “The revised nominal GDP figure for FY25 suggests that even with a lower expected growth of 9% in FY26—compared with the budgeted 10.1%—the fiscal deficit-to-GDP ratio can still be held at 4.4%. This allows for a slippage of around ₹30,000 crore without breaching the target.”

Madan Sabnavis, chief economist at Bank of Baroda, said the size of the transfer could provide the government with ₹50,000 crore to ₹60,000 crore in additional resources.

“The amount may offset possible shortfalls in customs duties due to reduced tariffs, weaker tax inflows from slower nominal GDP growth, or unexpected defense expenditure,” he said.

While the record dividend offers significant near-term fiscal support, Sabnavis cautioned that such large payouts may not be sustained in the future.

“Future dividends will depend on market conditions and how much the RBI sets aside as reserves,” he said.