RBI Annual Report 2025‑26: Balance Sheet, Record Surplus and the Economic Capital Framework

RBI Annual Report 2025‑26: The Accounts and Their Headline Numbers

What the RBI Annual Report Is and the Functions It Accounts For

The RBI Annual Report sets out the Reserve Bank's working and its accounts for the year. The 2025‑26 report, released on 29 May 2026, covers the year that ended on 31 March 2026, and its last chapter carries the audited balance sheet and income statement, which the auditors report to the Central Government under the Reserve Bank of India Act, 1934.

The RBI was founded on 1 April 1935 under that Act as a private shareholders' bank with a paid-up capital of five crore rupees. It was nationalised with effect from 1 January 1949, and its entire ownership now rests with the Government of India; the paid-up capital is still five crore rupees. The accounts reflect what the central bank does:

• Currency: It is the only institution that can issue currency.
• Money supply: It controls money supply through the bank rate, open market operations and reserve ratios.
• Government's banker: It acts as banker to the government.
• Forex custodian: It holds the country's foreign exchange reserves.
• Banks' bank: Ready to lend to banks at all times, it is the lender of last resort.

Headline Figures of the RBI Annual Report 2025‑26

The 2025‑26 accounts show a central bank that grew fast and earned more than ever. The balance sheet rose 20.6 per cent, gross income 26.4 per cent, and the RBI set aside far more for risks than a year earlier while still paying a record surplus to the government.

RBI Balance Sheet 2025‑26: Assets, Liabilities and Forex Reserves

RBI Balance Sheet: Why It Grew 20.6 Per Cent to ₹91.97 Lakh Crore

The RBI balance sheet grew by ₹15,71,699.15 crore, or 20.6 per cent, from ₹76,25,421.93 crore on 31 March 2025 to ₹91,97,121.08 crore on 31 March 2026. On the assets side, domestic investments rose 44.9 per cent, gold 63.8 per cent and foreign investments 7.9 per cent. On the liabilities side, revaluation accounts rose 63.4 per cent, notes issued 11.8 per cent, deposits 11.6 per cent and other liabilities 21.1 per cent.

• Asset mix: Domestic assets were 29.1 per cent of the total, and foreign currency assets, gold and loans abroad 70.9 per cent, against 25.7 and 74.3 per cent a year earlier.
• Gold: The RBI held 880.52 tonnes of gold on 31 March 2026, 0.94 tonnes more than a year before, while the value of gold assets rose 63.8 per cent.
• Notes in circulation: Notes in circulation stood at ₹41,23,983.55 crore on 31 March 2026.
• Revaluation: The Currency and Gold Revaluation Account rose to ₹21,68,530.23 crore, holding unrealised gains that are not distributed.

Foreign Exchange Reserves, Gold and Sterilisation in the Accounts

India's foreign exchange reserves, in rupees, rose 14.7 per cent in the year to ₹65,53,861.29 crore. Foreign currency assets were the largest part at ₹52,37,366.94 crore, up 8.0 per cent, while gold, including gold deposits, rose 63.8 per cent to ₹10,94,309.49 crore.

After the West Asia crisis began, more money left India than came in during March 2026, a net outflow of $11.7 billion driven by foreign portfolio investors, which ate into reserves and weakened the rupee. When foreign exchange flows add rupees to the economy or drain them, the RBI offsets their effect on the domestic money supply, a process called sterilisation. Its main tool is open market operations, the buying and selling of government bonds.

RBI Income, Expenditure and the Surplus Transfer to the Government

Sources of RBI Income: Foreign and Domestic Earnings

Gross income was ₹4,27,684.15 crore in 2025‑26, made up of ₹2,35,579.79 crore of interest and ₹1,92,104.36 crore of other income. Most of it came from abroad.

• Foreign sources: Income rose 26.6 per cent to ₹3,27,655.54 crore, and the rate of earnings on foreign currency assets rose to 6.4 per cent from 5.3 per cent.
• Domestic sources: Net income rose 25.9 per cent to ₹1,00,028.61 crore, mainly from interest on rupee securities, which rose to ₹1,17,739.57 crore.
• Liquidity operations: Under the Liquidity Adjustment Facility and related windows, the RBI paid ₹19,162.97 crore more in interest than it earned during the year.

Printing notes is a cost, not a source of income; it cost ₹4,875.20 crore in 2025‑26. Total expenditure was ₹1,41,091.69 crore, of which ₹1,09,379.64 crore was the provision to the Contingency Fund.

RBI Surplus Transfer to the Government: Section 47 and the 2025‑26 Record

Section 47 of the RBI Act, 1934, governs the transfer of the surplus. After the RBI has provided for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and the other matters that bankers usually provide for, it must pay the balance of its profits to the Central Government.

On 22 May 2026 the Central Board, at its 623rd meeting in Mumbai under Governor Sanjay Malhotra, approved a transfer of ₹2,86,588.46 crore for 2025‑26, the highest ever and 6.7 per cent more than the ₹2,68,590.07 crore of the previous year. It also moved ₹1,09,379.64 crore to the contingent risk buffer, against ₹44,861.70 crore a year earlier, keeping the buffer at 6.5 per cent of the balance sheet.

Transfers have risen sharply in recent years, from ₹30,307.45 crore for 2021‑22 and ₹87,416.22 crore for 2022‑23 to ₹2,10,873.99 crore for 2023‑24. Part of the 2025‑26 surplus came from gains on foreign assets and foreign exchange transactions and from interest on securities, so it moves with markets and the rupee.

Economic Capital Framework and the Debate on RBI Surplus Transfers

Bimal Jalan Committee and the Economic Capital Framework

How much the RBI may pay out depends on its Economic Capital Framework. In consultation with the government, the RBI set up an expert committee under Bimal Jalan to review it, and on 26 August 2019 the Central Board accepted all its recommendations. That year it transferred ₹1,76,051 crore, including ₹52,637 crore of excess provisions written back under the revised framework.

• Two kinds of capital: Realised equity, built from retained earnings, can meet all risks and losses; revaluation balances are unrealised gains that only buffer market risk and are not distributable.
• Contingent Risk Buffer: The committee recommended keeping realised equity, the contingent risk buffer, at 5.5 to 6.5 per cent of the balance sheet, made up of 4.5 to 5.5 per cent for monetary and financial stability risks and 1 per cent for credit and operational risks.
• Market risk: Market risk is measured by Expected Shortfall at a 99.5 per cent confidence level under stress.
• Distribution rule: Only if realised equity is above its requirement is the entire net income transferable; if below, provisions come first and only the rest is paid.

The committee treated the RBI's provisions for monetary, financial and external stability as the country's savings for a rainy day, kept with the RBI because it is the monetary authority and the lender of last resort.

RBI Surplus, Fiscal Space and Central Bank Autonomy

Surplus transfers were around ₹30,000 crore to ₹65,000 crore a year for several years before 2019, when the revised framework took effect. The 2025‑26 transfer is fully consistent with the framework, but its scale has raised questions about the central bank's role.

• Fiscal space: Because the transfer is non-tax revenue, it gives the Union government money to spend without raising taxes or borrowing more.
• Federal angle: As non-tax revenue it stays with the Union; it is not part of the divisible pool shared with States under Finance Commission formulas, while States face borrowing limits under Article 293.
• Autonomy: A central bank's credibility rests on distance from the government's fiscal needs, so large payouts invite the question of when a stabilising institution starts to act as a fiscal instrument.