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Informist, Tuesday, May 19, 2026

 

NEW DELHI – The Reserve Bank of India's central board is likely to meet Friday in Mumbai to discuss and approve the transfer of surplus to the Centre for the financial year 2025-26 (Apr-Mar), a finance ministry official said Tuesday.

 

Besides Governor Sanjay Malhotra and four deputy governors, the 15-member RBI central board comprises Economic Affairs Secretary Anuradha Thakur, Financial Services Secretary M. Nagaraju, and industrialists Anand Mahidra and Venu Srinivasan.

 

Economists and market participants expect the central bank to transfer INR 2.7 trillion to INR 3 trillion to the government as surplus for FY26. The RBI had transferred a record INR 2.69 trillion for FY25. The FY27 Budget has projected the surplus transfer from the RBI and dividends from public sector banks and financial institutions at INR 3.16 trillion, up 3.7% from the revised estimate of INR 3.05 trillion for FY26. 

 

The central bank transfers the surplus to the government in May of the subsequent year. 

 

The RBI's surplus transfer depends on the Contingent Risk Buffer it sets aside. On Friday, the RBI's central board will also approve the Reserve Bank's annual report and accounts for FY26 and decide on the Contingent Risk Buffer level. Last year, the RBI increased the risk buffer range to 4.5-7.5% from 5.5-6.5% and raised the buffer it maintained to 7.5%. The lower buffer could increase the surplus transfer to the Centre. 

 

The central bank's balance sheet was INR 76.25 trillion at the end of FY25, up 8.2% on year. Assuming it grew 10% in FY26, its balance sheet would have been INR 83.88 trillion at the end of Mar. 31. With a balance sheet of INR 83.88 trillion, a 50-basis-point cut in the Contingent Risk Buffer from 7.5?n increase the surplus to the government by INR 420 billion.

 

The central bank's surplus transfers to the government, which have risen steadily over the years, have been a major source of support to government finances in recent years. This year, however, the government is more dependent than ever on Mint Street to ensure that the fiscal deficit does not exceed the target. The government's finances are currently under pressure due to a potential rise in expenditure following the war in West Asia and slower revenue collections. 

 

The Budget for FY27 pegged the government's fiscal deficit at 4.3% of GDP, but the government now sees it at 4.5% of GDP, following a downward revision of GDP in absolute terms for earlier years under the new data series. In absolute terms, the government has projected the FY27 fiscal deficit at INR 16.958 trillion.  End

 

Reported by Priyasmita Dutta and Sagar Sen

Edited by Avishek Dutta

 

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