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The Reserve Bank of India (RBI) may transfer a record surplus dividend of Rs 2.7 lakh crore to Rs 3 lakh crore to the central government in FY26, marking a nearly 50 per cent year-on-year increase. A report by SEBI-registered Front Wave Research highlighted this development and noted that the dividend could be announced by late May. The amount would significantly exceed last year’s record-high transfer of Rs 2.1 lakh crore and could have a major impact on India’s fiscal position and banking system liquidity. 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.”
Three Key Drivers Behind The Surplus Surge
The report identified three major factors contributing to the expected surge in the surplus transfer. 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 earned higher interest income on its over USD 600 billion in foreign exchange reserves due to elevated global interest rates. This contributed significantly to the increase in surplus.
Third, on the domestic front, the RBI gained solid income through Open Market Operations (OMOs), bond holdings, and repo transactions. These sources added to the central bank’s earnings and strengthened its balance sheet, boosting the overall surplus available for transfer.
Liquidity Surge Expected, Bond Market Reacts
Report stated that the dividend payout could lead to a sharp turnaround in banking system liquidity. “Once the dividend is paid and spent, banking system liquidity could climb to Rs 5.5-6 trillion, up from a recent deficit,” it said.
Bond markets have started to react in anticipation of this development. The yield on the 10-year government bond has declined to 6.23 per cent and may fall further as markets price in the expected liquidity boost. Short-term yields are dropping more rapidly, steepening the yield curve—often interpreted as a sign of possible rate cuts.
Positive Momentum Across Key Sectors
PSU banks, NBFCs, infrastructure, and consumption sectors already show strong momentum. Investors have started pricing in the expected liquidity surge from the record RBI dividend. Lower bond yields and improved liquidity outlook have boosted sentiment in interest-sensitive sectors. PSU bank stocks are rising on expectations of stronger balance sheets and credit growth. NBFCs benefit from cheaper funding and better lending conditions. Infrastructure firms gain from improved capital flow and government spending prospects. Consumption-related sectors see demand revival as liquidity conditions ease. The anticipated dividend acts as a stealth stimulus and could drive broad-based economic activity through FY26.
(With Inputs From ANI)
