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The RBI is expected to transfer a record surplus dividend of Rs 2.7 lakh crore to Rs 3 lakh crore to the govt in FY26, an almost 50 per cent increase YoY, highlighted a report by Front Wave Research, a SEBI-registered Research Analyst.
This would mark a sharp rise from last year's historic Rs 2.1 lakh crore transfer, and could significantly impact India's fiscal position and liquidity conditions in the coming months. The dividend is likely to be announced by late May. The report said "The RBI is expected to transfer a record surplus to the government in FY26, with estimates ranging from Rs 2.7 lakh crore to Rs 3 lakh crore". The report expected surge in surplus transfer is driven by three major factors. First, the RBI's timely forex market operations generated strong trading gains. The central bank bought US dollars at around Rs 83-84 and sold them at Rs 84-87, locking in notable profits. Second, the RBI's over USD 600 billion in foreign exchange reserves earned higher interest income due to elevated global rates. This added significantly to the central bank's surplus. Third, on the domestic front, the RBI earned solid income through Open Market Operations (OMOs), bond holdings, and repo transactions. These helped strengthen its balance sheet and further raised the size of the surplus available for transfer. The report also highlighted that when these funds are paid and spent, banking system liquidity could rise sharply, potentially touching Rs 5.5-6 trillion. This would be a huge turnaround from the recent liquidity deficit. It said "Once the dividend is paid and spent, banking system liquidity could climb to Rs 5.5-6 trillion, up from a recent deficit". The bond market has already started reacting. The yield on the 10-year government bond has fallen to 6.23 per cent and may decline further as markets price in the expected liquidity surge. Short-term yields are dropping even faster, leading to a steepening of the yield curve, often seen as a sign of possible rate cuts. Sectors like PSU banks, NBFCs, infrastructure, and consumption are already seeing positive momentum. If the record dividend is confirmed, it may act as a stealth stimulus and support economic growth through FY26. (ANI)
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