The Reserve Bank of India has transferred an all-time high dividend of ₹2.9 lakh crore to the Centre for FY26, providing the government with a fiscal cushion to address challenges arising from elevated global energy prices and the ongoing US-Iran war. As per The Times of India, the RBI board approved the transfer of surplus of ₹2,87,588.46 crore to the Central Government for the accounting year 2025-26, representing a 6.7% increase over the previous year's ₹2.69 lakh crore. This transfer demonstrates the central bank's strong financial performance amid challenging global conditions, with the gross income of RBI increasing by 26.42% over the previous year while the expenditure before risk provisions increased by 27.6%. The net income before risk provisions and transfer to statutory funds stood at ₹3,95,972.10 crore, up from ₹3,13,455.77 crore in FY25. The Balance Sheet of the Bank expanded by 20.61% to ₹91,97,121.08 crore as on March 31, 2026, reflecting robust growth in the central bank's assets. The decision on the dividend payout was taken at the 623rd meeting of the Central Board of Directors of RBI under the Chairmanship of Governor Sanjay Malhotra.
India is better placed to manage retail inflation among the top 10 economies, according to an analysis by industry lobby ASSOCHAM unveiled on Friday, amidst the ongoing disruptions caused by the West Asia conflict. India's inflation stood at 3.2 per cent in February 2026 and rose to 3.5 per cent in April 2026, a 0.3 percentage-point increase, demonstrating relatively contained price pressures compared to global peers. This performance is significantly better than the significant increase in the US, where inflation rose from 2.4 per cent in February 2026 to 3.8 per cent in April 2026, a 1.4 percentage-point increase, according to ASSOCHAM. Consumer price inflation (CPI) rose to 3.5% in April, largely due to food inflation, while core inflation remained steady, indicating relatively contained underlying pressures. However, rising global commodity prices due to "elevated transportation and logistics costs" pose upside risks going forward.
The RBI Board decided to transfer ₹1.09 lakh crore towards the Contingent Risk Buffer (CRB) for FY26, representing a 143% increase from the previous year's ₹44,861.70 crore, while maintaining the CRB at 6.5% of the RBI's balance sheet size. As per The Times of India, 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 ₹91,97,121.08 crore as of March 31, 2026. Under the revised Economic Capital Framework (ECF), the RBI is required to maintain the CRB within a range of 4.5% to 7.5% of its balance sheet, with the current transfer reflecting the central bank's prudent risk management approach amid global economic uncertainties. India Ratings & Research Chief Economist Devendra Kumar Pant noted that "The transfer would have been ₹64,518 crore higher had RBI limited contingency risk buffer (CRB) to the last year's level of ₹44,862 crore."
Deepak Shenoy, SEBI registered portfolio manager and Capital Mind CEO, has criticised the RBI's dividend decision, calling it "disappointing" in a post on X on Friday. According to Shenoy's analysis, "The Central Bank clocked a bottom-line of nearly 4 lakh crore, and even then they chose to keep a substantial portion of it into their Contingent Risk Buffer." He questioned the central bank's decision to maintain the CRB at 6.5% of the balance sheet size, stating that "CRB is a risk buffer the Central bank has never had to use ever, and won't." Shenoy expressed disappointment that the RBI chose to keep a substantial portion of its profits in the risk buffer rather than transferring more to the government. "A little disappointing that RBI has given just 2.86 lakh crore as a dividend to the government. They had nearly 4 lakh crore of profit. And yet, chose to keep a substantial portion of it into their CRB," he stated. The fund manager also suggested that the RBI should "sell their gold now, reduce the balance sheet size which he called "extremely bloated" so that they can return even more."
The aggregate net profit of public sector banks increased 11.1% to a historic high of ₹1.98 lakh crore, marking the fourth consecutive year of aggregate profitability for PSU lenders. This substantial profitability improvement from state-owned lenders will significantly boost the government's overall non-tax revenue estimates. Kotak Mahindra Bank Chief Economist Upasna Bhardwaj noted that "The RBI surplus transfer is marginally lower than expected, thereby limiting the levers for the government in terms of managing the fiscal slippage risks." However, she added that "While we do not see extra borrowing risks for now, we continue to monitor the extent of subsidy and tax growth slowdown." Resurgent India MD Jyoti Prakash Gadia emphasized that "The record surplus transfer of ₹2.87 lakh crore for FY26 gives the government a strong fiscal cushion at a time of global uncertainty." He noted that "It gives the Centre room to support priority spending on infrastructure, healthcare, education, digital expansion and renewable energy, while helping keep the fiscal deficit under control."
The Reserve Bank of India is considering all available options to stabilise the rupee, including an interest rate hike, more currency swaps, and raising dollars from investors overseas, according to people familiar with the matter. Top officials at the RBI, including Governor Sanjay Malhotra, have held a series of internal meetings to discuss possible courses of action after the rupee plunged to a fresh low of almost 97 to a dollar this week. The central bank's six-member monetary policy committee is scheduled to meet June 3-5, with the committee keeping its benchmark rate unchanged at 5.25% this year, although most economists predict a hike in coming months as inflation accelerates. The next scheduled monetary policy decision is on June 5, although the RBI has previously made an out-of-cycle adjustment in May 2022. ASSOCHAM has suggested the RBI to maintain the status quo on the repo rate, while introducing liquidity, interest subvention, and moratorium support measures for export-oriented and energy-intensive MSMEs in the forthcoming review of monetary policy in early June.
