RBI posts record ₹2.87 lakh crore dividend to government on strong earnings

The Reserve Bank of India's gains from foreign exchange transactions rose 52% year-on-year to ₹1.69 trillion in FY26, compared to ₹1.11 trillion in FY25, according to the central bank's annual report. In FY26, the RBI sold a record $53.13 billion in the spot market to defend the rupee from steep depreciation, with the local currency depreciating 9.5% during the year. However, marking-to-market of outstanding forward contracts resulted in a net unrealised loss of ₹43,403 crore as of March 31, 2026, compared to a net unrealised gain of ₹6,985 crore in the previous year. This marks the first mark-to-market loss on forward contracts in at least five years, with the outstanding net short position of the forward book swelling to $103.06 billion by end-March from $84.3 billion a year ago.

The RBI's foreign exchange income increased to ₹1.69 lakh crore in FY26, up from ₹1.11 lakh crore in the previous year, with additional gains from securities contributing to the overall surplus. The central bank earned ₹1.63 lakh crore from amortisation of premium on foreign securities, up from ₹1.37 lakh crore in FY25, while interest income from foreign securities increased to ₹1.08 lakh crore from ₹97,006.66 crore. Interest income rose 11.81% to ₹2.36 trillion in FY26, with interest earned on rupee bonds jumping 37.66% to ₹1.18 trillion, as reported by Business Standard. The RBI books profits when it sells dollars from its reserves at higher exchange rates than when they were purchased, with these gains adding to its surplus that is then transferred to the government.

India's household financial savings demonstrated strong growth, increasing to 7% of gross national disposable income (GNDI) in FY25 from 5.8% a year earlier, as reported by the Reserve Bank of India in its annual report. This improvement was driven by a sharp decline in household financial liabilities, which fell to 4.8% of GNDI in 2024-25 from 6.4% in the previous year. While gross household financial savings moderated slightly to 11.8% of GNDI in 2024-25 from 12.1% in 2023-24, the overall trend shows increased financial discipline among Indian households. Instrument-wise, household financial savings are dominated by deposits, followed by provident and pension funds and insurance, with a gradual increase in investment in shares and debentures.

The RBI's balance sheet size increased by 21% to ₹91.97 lakh crore in FY26, with the increase primarily driven by domestic investments, gold, and foreign investments rising by 44.9%, 63.8%, and 7.9% respectively. On the liabilities side, revaluation accounts, notes issued, deposits and other liabilities increased 63.4%, 11.8%, 11.6%, and 21.1% respectively. The balance sheet expanded by 20.6% to nearly ₹92 lakh crore during the year, reflecting both asset growth and valuation gains. A major contribution came from the currency and gold revaluation account, which rose by over ₹8.7 lakh crore to ₹21.7 lakh crore. The central bank made a provision of ₹1.09 lakh crore and transferred it to the Contingency Fund, while the debit balance in the Foreign Currency Forward Contracts Valuation Account was adjusted against the Contingency Fund on March 31, 2026, and reversed on the first working day of the following year. India maintained a forex kitty of $691 billion at the end of March, which was sufficient to cover 11 months of imports and 90% of the country's external debt.

The RBI held 880.52 metric tonnes of gold as of March 31, 2026, of which 312.32 metric tonnes were held as backing for notes issued. The value of gold held as assets of the Issue Department rose 64.1% to ₹3.88 trillion from ₹2.37 trillion a year earlier, attributed to the rise in gold prices during the year. Balances under the Currency and Gold Revaluation Account increased to ₹21.69 trillion at end-March 2026 from ₹13.03 trillion a year earlier. The Investment Revaluation Account-Rupee Securities balance stood at nil against ₹16,843 crore in FY25, while the Foreign Currency Assets Valuation Account balance declined to nil from ₹6,985 crore a year ago. The value of gold holdings rose by 63.8% to ₹10.9 lakh crore, supported by higher gold prices and valuation effects, while the rupee's depreciation against major currencies further inflated the domestic value of foreign assets.

Chief Economic Advisor V Anantha Nageswaran highlighted that managing macroeconomic fundamentals has become a larger priority following the West Asia conflict. Speaking at an event on securitisation, Nageswaran emphasised that the energy shock triggered by the conflict has led to massive global energy price movements after supply disruptions in the Strait of Hormuz. "In the current context of having to deal with the energy price, energy shock, current account deficit (CAD) and the balance of payments (BoP), etc. These, therefore, have assumed a much larger priority, urgency at this point," Nageswaran stated. The government's focus on managing these macroeconomic variables reflects the immediate impact of geopolitical developments on India's economic stability.

US Trade Representative Sergio Gor announced that the India-US trade deal is expected to be finalised over the next few weeks, marking significant progress in bilateral economic relations. Speaking at the India-US Business Council Summit, Gor emphasised that the US realises India's potential, not just economically but also strategically, with President Donald Trump looking to partner with countries that the US trusts deeply. "India is one of those partners. Trust is not just a framework. It is delivering real results. You have a government that is forward-leaning, and that has cut and changed rules to accommodate giant tech companies that we have trusted in the United States and that are now looking to expand in trusted territories such as India," Gor stated.