RBI to transfer Rs 2.7 lakh crore as dividend to govt, a record

MUMBAI: The RBI will transfer a record Rs 2.7 lakh crore to the govt as a dividend for the current financial year, exceeding last year's Rs 2.1 lakh crore and the budget estimate. The dividend outflow surpasses the Rs 2.6 lakh crore the govt projected to receive from the RBI, state-run banks, and financial institutions put together for FY26. The increase in the contingency buffer reflects a more cautious approach by the central bank amid global uncertainty and domestic financial stability concerns.

The higher-than-expected payout will help bring down rates, with analysts expecting the yield on government bonds to come down further. The actual profit may have been higher, as the RBI raised its contingency risk buffer to 7.5% from 6.5% a year ago, requiring it to retain a larger share of earnings. Higher income from foreign exchange sales, improved returns on overseas assets, and gains from liquidity operations underpinned the surplus. These factors contributed to the transfer, despite the RBI choosing to hold back a portion of its earnings.

Also read: How RBI earns profit, decides dividend: Explained

According to Aditi Nayar, chief economist at ICRA, the RBI's dividend exceeds budget assumptions by around Rs 40,000 crore to Rs 50,000 crore, or 11-14 basis points of GDP. This offers a cushion for the govt to absorb lower-than-expected tax or disinvestment receipts, or to manage additional spending. Nayar said 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 Rs 30,000 crore without breaching the target.

Madan Sabnavis, chief economist at Bank of Baroda, said the payout is larger than anticipated and could provide the govt with Rs 50,000 crore to Rs 60,000 crore in extra resources.

He said the amount may offset possible shortfalls in customs duties due to reduced tariffs, weaker tax inflows from slower nominal GDP growth, or unexpected defence expenditure.

While the higher dividend offers near-term fiscal relief, Sabnavis noted that it may not be repeated annually. Although the RBI has raised its contingency buffer to 4.5-7.5% to manage risks in an uncertain environment, such high transfers may not be sustainable every year.

Future dividends will depend on market conditions and how much the RBI sets aside as reserves.


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