RBI Expected To Pay Record Dividend To Govt Amid War-Induced Fiscal Crisis

While the government is facing an unprecedented fiscal crisis due to the ongoing conflict in West Asia, some relief may come from the country’s central bank.

The Reserve Bank of India (RBI) is expected to pay its highest-ever dividend to the government for the previous financial year (FY26), according to a report by Press Trust of India citing sources.

The RBI had paid a record dividend of Rs 2.69 lakh crore to the government for the financial year 2024-25. This was about 27 percent higher than the previous year’s payout of Rs 2.11 lakh crore.

The central bank will take a decision on the quantum of the dividend to be paid for FY26 at its board meeting. The meeting is expected to be scheduled this month, according to the report.

The final value of the dividend is determined on the basis of the revised Economic Capital Framework (ECF) approved by the Central Board of the RBI.

According to the revised framework, the risk provisioning under the Contingent Risk Buffer (CRB) is required to be maintained within a range of 4.50 percent to 7.50 percent of the RBI’s balance sheet.

A higher dividend is expected to help the government deal with the fiscal crisis caused by the ongoing conflict in the Gulf region.

The government has already announced various measures to limit imports amid rising costs of crude oil, fertilisers, and several other commodities.

Most recently, the Centre raised import duties on gold, silver, and other precious metals. The total import tax on gold has been increased to 15 percent from 6 percent earlier.

According to some reports, the government is also looking to ease the Foreign Exchange Management Act to attract foreign investment into the country amid record foreign portfolio investor (FPI) selling.

All these efforts are a result of the continuing conflict in the Gulf region, which has increased inflationary pressure on the economy.