The Reserve Bank of India (RBI) on May 22 declared a record dividend payout of ₹2.87 lakh crore to the central government for FY26, which will provide fiscal support at a time when rising oil and fertiliser costs are emerging as a major burden due to the West Asia war.

However, the payout is lower than the government’s Budget estimate of ₹3.16 lakh crore from dividends and surplus transfers by the RBI, nationalised banks, and financial institutions.

“The Central Board approved the transfer of surplus of ₹2.87 lakh crore to the central government for the accounting period of 2025-26,” the RBI said in a press release after the 623rd meeting of the Central Board of Directors of the RBI, chaired by Governor Sanjay Malhotra.

The surplus for any financial year is determined based on the revised Economic Capital Framework (ECF) approved by the RBI’s Central Board.

The RBI also maintained a healthy contingency risk buffer (CRB) for FY26. “Taking into consideration the current macroeconomic factors, financial performance of the Bank, and maintenance of appropriate risk buffers, the Central Board decided to transfer ₹1,09,379.64 crore towards the CRB for FY26 as against ₹44,861.70 crore in the previous year, and maintain the CRB at 6.5% of the size of the RBI balance sheet,” it said.

The RBI’s gross income increased 26.42% over the previous year, while expenditure before risk provisions rose 27.60%. Net income before risk provisions and transfer to statutory funds stood at ₹3,95,972.10 crore in FY26, compared with ₹3,13,455.77 crore in FY25.

The RBI’s balance sheet expanded 20.61% to ₹91.97 lakh crore as of March 31, 2026.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said the RBI’s surplus transfer was slightly below expectations, which could restrict the government’s flexibility in managing fiscal pressures.

“The RBI surplus transfer is marginally lower than expected, thereby limiting the levers for the government in terms of managing the fiscal slippage risks. While we do not see extra borrowing risks for now, we continue to monitor the extent of subsidy and tax growth slowdown,” she said.

For FY25, the RBI had paid a record dividend of ₹2.69 lakh crore to the central government, 27% higher than the ₹2.11 lakh crore transferred in the previous year.

Each year, the RBI transfers a part of its surplus to the government under Section 47 of the RBI Act. The payout is a statutory requirement and not a discretionary gesture.

The government is currently facing mounting fiscal pressure due to rising crude oil and fertiliser prices. Earlier this month, it announced two fuel price hikes in a move aimed at offsetting financial losses caused by the sharp rise in crude oil prices amid the West Asia conflict.

Policymakers are increasingly focussing on measures to contain India’s import bill, which has surged alongside rising crude prices and inflation. Retail inflation has climbed to a 13-month high, while wholesale inflation accelerated to 8.3% in April, marking its fastest pace in three and a half years.

Economists now expect the RBI to begin raising interest rates sooner rather than later—possibly at the June 5, 2026 policy meeting—to curb inflationary pressures, even if it comes at the cost of slower growth.