RBI Expected to Shower Govt With Record Rs 3 Lakh Crore Dividend in FY26: Report

RBI Likely to Transfer Record Rs 2.7–3 Lakh Crore Dividend in FY26: Front Wave Research

The Reserve Bank of India (RBI) is expected to transfer a record surplus dividend of Rs 2.7 lakh crore to Rs 3 lakh crore to the government in FY26, marking a nearly 50% year-on-year increase, according to a report by SEBI-registered firm Front Wave Research. This would surpass last year’s historic Rs 2.1 lakh crore transfer and could have a major impact on India’s fiscal outlook and liquidity conditions.

The dividend announcement is expected by late May.

What’s Driving the Surplus Surge?

The report identifies three key drivers behind the anticipated increase in the RBI’s surplus:

1. Profitable Forex Market Operations:
   The RBI capitalized on rupee volatility, buying US dollars at around Rs 83–84 and selling them at Rs 84–87, resulting in significant trading gains.

2. Higher Interest Income on Forex Reserves:
   With foreign exchange reserves exceeding $600 billion, the RBI benefited from elevated global interest rates, boosting its interest income.

3. Strong Domestic Earnings:
   Income from Open Market Operations (OMOs), bond holdings, and repo transactions further strengthened the central bank’s balance sheet.

Liquidity Surge & Market Impact

The report also notes that once the surplus is paid and spent, systemic liquidity could surge to Rs 5.5–6 trillion—reversing the current liquidity deficit.

“Once the dividend is paid and spent, banking system liquidity could climb to Rs 5.5–6 trillion, up from a recent deficit,” the report said.

Bond markets have already begun to react. The 10-year government bond yield has dropped to 6.23%, and may fall further as markets factor in the expected liquidity infusion. Short-term yields are declining even faster, causing a steepening of the yield curve—often interpreted as a signal of potential rate cuts.

Sectoral Implications

Sectors such as PSU banks, NBFCs, infrastructure, and consumption are already witnessing positive momentum. If confirmed, the record dividend could serve as a stealth stimulus, bolstering economic activity and supporting growth through FY26.

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