RBI approves 2.9 lakh crore dividend to government, up 6.7% from last year

Key Takeaways

• Dividend may cushion govt amid higher subsidy bill MUMBAI: The Reserve Bank of India board on Friday okayed a dividend of Rs 2.87 lakh crore to govt, 6.7% more than last year's Rs 2.69 lakh crore, even as it sharply raised transfers to its contingency risk buffer amid a surge in earnings and balance sheet expansion.The higher dividend came despite a transfer of Rs 1.09 lakh crore to the contingency risk buffer, an increase of 143% from last year's Rs 44,861 crore, driven by a 26% rise in net income to Rs 3.96 lakh crore.
• Despite the larger transfer, the ratio of the contingency risk buffer to the RBI's balance sheet declined to 6.5% from 7% a year ago because the central bank's balance sheet expanded 20.6% to Rs 91,97,121.08 crore as of March 31, 2026.The increase in the balance sheet could have been due to a variety of factors such as rising gold prices, increased intervention in bond and forex markets, liquidity management and surge in currency in circulation.The central bank's financial outcome reflected a calibrated capital management approach in 2025-26, balancing higher internal provisioning with a larger surplus payout to the govt.
• This marked a shift from the previous year, when the focus was on strengthening safety buffers over surplus distribution.The surplus transfer is good news for the Centre, which stands to gain at a time when it is staring at the prospect of higher fertiliser and cooking gas subsidy as well as a tax hit due to a spike in global oil prices.
• During the current fiscal year, Centre has budgeted for Rs 3,16,000 crore as dividends from RBI, banks and financial institutions compared with Rs 3,04,590 crore last year.With SBI and LIC providing dividends of over Rs 14,000 crore, govt has to garner Rs 16,000 crore dividend from other banks and financial institutions to meet its budgeted target.
• RBI's net income before provisions rose 26.3% to around Rs 3.96 lakh crore from Rs 3.13 lakh crore in the previous year.