RBI approves record ₹2.87 lakh crore dividend transfer to Centre for FY26

THe hold cant of bharat (RBI) on fri sanctioned a record dividend transfer of ₹2.87 lakh crore to the central government for fiscal year 2026 (FY26) while sharply increasing provisions towards its contingent risk buffer (CRB), signalling a balancing act between supporting public finances and preparing for heightened global economic risks.The dividend payout, higher than last year’s ₹2.68 lakh crore transfer but slightly below expectations, is expected to provide a significant boost to the Centre’s finances at a time of rising pressure from volatile crude oil prices, potential subsidy burdens and slowing economic growth.Fiscal concerns remainHowever, economists remained divided on whether the transfer would be enough to prevent a widening fiscal deficit amid escalating geopolitical tensions linked to the US war on Iran.The decisions were taken at a meeting of the RBI’s Central Board of Directors chaired by governor Sanjay Malhotra. The meeting, attended by deputy governors Swaminathan J., Poonam Gupta, Shirish Chandra Murmu and Rohit Jain along with other board members, reviewed the global and domestic economic outlook as well as risks to growth.Economists divided on impactDevendra Kumar Pant, chief economist at India Ratings & Research, said the transfer—equivalent to 90.8% of the government’s budgeted non-tax revenue expectations—would help ease pressure on the fiscal deficit amid geopolitical uncertainties.However, Aditi Nayar, chief economist at Icra Ltd, said the fiscal deficit could still remain under strain due to expectations of higher fertilizer and fuel subsidies, alongside weaker tax collections and lower dividends from oil marketing companies.“While the Economic Stabilisation Fund and customs duty hikes on gold and silver imports are likely to provide some cushion, we expect the GoI to exceed the budgeted fiscal deficit target for FY27 of 4.3% of GDP by 40 basis points, assuming an average crude oil price of $95/barrel,” Nayar said.“The RBI surplus transfer is marginally lower than expected, thereby limiting the levers for the government in terms of managing the fiscal slippage risks,” said Upasna Bhardwaj, chief economist of Kotak Mahindra Bank. “While we do not see extra borrowing risks for now, we continue to monitor the extent of subsidy and tax growth slowdown.”Budget assumptions under watchThe finance ministry had budgeted a total dividend of ₹3.15 lakh crore in FY26 from RBI and other public-sector institutions. In the Union Budget for FY27, the ministry pegged total dividend receipts at ₹3.16 lakh crore.Higher allocation to risk bufferThe board also decided to transfer ₹1.09 lakh crore towards RBI’s Contingent Risk Buffer (CRB), higher than ₹44,862 crore in FY25, taking into consideration the current macroeconomic factors, financial performance of the bank and maintenance of appropriate risk buffers, it said.“Transferring a higher amount to the CRB will help the RBI intervene in financial markets as per the evolving domestic and global macroeconomic conditions,” India Ratings’ Pant said.Balance sheet expandsHowever, the CRB as a share of the balance sheet declined to 6.5% from 7.5% last year. The Economic Capital Framework (ECF) allows RBI to maintain a CRB of 4.5-7.5% of the balance sheet size. RBI’s balance sheet expanded 20.6% y-o-y to ₹91.97 lakh crore as at the end of March 2026.