RBI Balance Sheet & Annual Report Analysis ( FY 2025-26 )

CFO Bridge Annual Analysis | Reserve Bank of India - Accounts for the year ended March 31, 2026

Prepared from the RBI Annual Report 2025-26 (released May 2026). All figures audited unless stated. Currency: ₹ crore unless otherwise noted.

The One-Line Story

This was a revaluation year, not a performance year. The balance sheet ballooned 20.6% far outpacing last year’s 8.2% but more than half the expansion came from price movements (gold and the rupee), not from RBI building real economic muscle. And despite income surging 26.4%, the dividend to the Government grew just 6.7%, because the RBI quietly absorbed ₹1.09 lakh crore into its Contingency Fund. The headline numbers look spectacular; the underlying mechanics deserve scrutiny.

Executive Summary - Key Takeaways

1. Balance sheet crossed ₹91.97 lakh crore, up 20.6% YoY (from ₹76.25 lakh crore) a ₹15.72 lakh crore increase. Last year’s growth was only 8.2%. This is a step-change in size.

2. Gold value jumped 63.8%, but the physical stock barely moved. RBI added just 0.94 metric tonnes of gold all year (879.58 MT → 880.52 MT). Compare this to FY25, when it added ~57 MT. This year’s entire ₹4.26 lakh crore gold gain is pure price + rupee revaluation not accumulation. The contrast with last year is the single most important narrative shift.

3. The dividend grew only 6.7% (to ₹2,86,588 crore) despite income rising 26.4%. The gap was deliberately engineered: the RBI made a ₹1,09,379.64 crore provision to the Contingency Fund more than double last year’s ₹44,861.70 crore. Had it provisioned at last year’s pace, the dividend could have been materially higher.

4. Available Realised Equity (the RBI’s capital buffer) was deliberately brought DOWN from 7.5% to 6.5% of the balance sheet to the upper bound of the original Bimal Jalan band (5.5%-6.5%), having sat above it at 7.5% last year. The revised Economic Capital Framework (approved May 2025) gave the Board the flexibility, and it used it.

5. Currency printing cost FELL 23.5% to ₹4,875.2 crore (from ₹6,372.8 crore). After last year’s 25% surge drew criticism, RBI cut the banknote indent. The "why print so much in a UPI economy" question from last year has, at least partly, answered itself.

6. A new opacity flag emerged: "Miscellaneous Expenses" exploded 138.5% from ₹4,273.56 crore to ₹10,193.96 crore with no granular breakdown. This is the new "what exactly is in here?" line item.

7. Income surged 26.4% to ₹4.27 lakh crore, driven overwhelmingly by exchange gains of ₹1,68,906 crore (up from ₹1,11,143 crore) i.e., the RBI profiting from a depreciating rupee on its forex book.

8. Forex reserves rose to $691.1 billion (₹65.54 lakh crore), but the dollar value of Foreign Currency Assets actually FELL 2.7% (to $552.3 bn). The reserve number rose almost entirely because gold’s dollar value rose 47.6%. Headline reserves and "real" deployable forex are diverging.

9. Total expenditure "rose 102.4%" a misleading optic. The doubling is overwhelmingly the ₹1.09 lakh crore CF provision. Even excluding provisions, costs rose ~27.6% and roughly 86% of that increase is the single, opaque Miscellaneous Expenses line. The headline overstates cost growth, but operating costs were not flat.

10. FY27 outlook: Real GDP growth projected at 6.9% (risks to the downside); CPI inflation at 4.6% (risks to the upside). MPC cut the repo rate 100 bps during FY26 and has held a neutral stance since June 2025.

1. Balance Sheet Analysis

The RBI’s balance sheet expanded by ₹15,71,699 crore (20.6%) to ₹91,97,121 crore as on March 31, 2026.

Assets side, what drove the growth

Asset head	FY25 (₹ cr)	FY26 (₹ cr)	Change
Gold (BD + ID)	6,68,162	10,94,309	+63.8%
Investments: Domestic	15,58,574	22,58,591	+44.9%
Investments: Foreign	48,83,533	52,68,234	+7.9%
Loans & Advances	4,34,710	4,77,219	+9.8%
Other Assets	78,039	96,224	+23.3%
Total Assets	76,25,422	91,97,121	+20.6%

The standout is domestic investments up 44.9%, RBI substantially expanded its holdings of government securities (consistent with OMO purchases to inject durable liquidity during the easing cycle). Gold’s 63.8% jump is a revaluation effect (see Section 2).

Composition: Domestic assets were 29.1% of the total; foreign currency assets, gold and overseas loans together made up 70.9%.

Liabilities side

Liability head	FY25 (₹ cr)	FY26 (₹ cr)	Change
Revaluation Accounts	13,26,793	21,68,530	+63.4%
Notes Issued	36,87,827	41,24,767	+11.8%
Deposits	17,17,404	19,16,692	+11.6%
Other Liabilities	3,21,249	3,89,075	+21.1%
Contingency Fund	5,42,427	5,68,333	+4.8%
Asset Development Fund	22,975	22,975	0.0%

The Revaluation Accounts (+63.4%) are the real engine of liability-side growth. The Currency and Gold Revaluation Account (CGRA) alone rose from ₹13.03 lakh crore to ₹21.69 lakh crore unrealised, mark-to-market gains on gold and forex that sit on the balance sheet but cannot be distributed. This is the crux of the year: more than half the balance-sheet expansion is unrealised paper revaluation, not realised earning capacity.

CFO Bridge angle:  A 20.6% balance-sheet jump sounds like aggressive growth. In reality, ₹8.42 lakh crore of the ₹15.72 lakh crore increase (54%) is the revaluation account,  paper gains from a weaker rupee and dearer gold. Strip that out and "real" growth is far more modest. This is the difference between looking bigger and being stronger.

2. Gold: A Revaluation Story, Not an Accumulation Story

This is where this year diverges most sharply from last year.

Metric	FY25	FY26	Change
Total gold (value, BD+ID)	₹6,68,162 cr	₹10,94,309 cr	+63.8%
Total gold (quantity)	879.58 MT	880.52 MT	+0.94 MT (+0.1%)
Per MT gold value (BD+ID)	₹759.63 cr	₹1,242.80 cr	+63.60%
Gold in USD terms	$78.18 bn	$115.40 bn	+47.6%
Share of gold in Net Foreign Assets	-	17.2%	rising

Last year, RBI added ~57 metric tonnes and the value rose 57%. This year, the value rose even more (63.8%) while RBI added less than 1 tonne. The entire gain came from (1) the surge in global gold prices, and (2) the depreciation of the rupee against the USD, which inflates the rupee value of gold held.

Of the 880.52 MT: 312.32 MT backs Notes Issued (held in India), and 568.20 MT is a Banking Department asset. Within that 568.20 MT BD holding, RBI continued repatriating gold to India, India-held gold rose from 200.60 MT to 367.73 MT while gold held abroad fell from 367.60 MT to 200.47 MT (a shift of ~167 MT back onshore).

CFO Bridge angle:  Headlines will say "RBI’s gold soared 64%." The truth: RBI essentially stopped buying gold this year. What you’re seeing is the market re-pricing a near-static hoard. For a treasury audience, this is a textbook reminder that revaluation gains are not income, they can reverse just as fast if gold corrects or the rupee strengthens.

3. Contingency Fund, Risk Buffers & the Dividend Mechanics

This is the most consequential and least understood story in the report.

Item	FY25	FY26
Provision transferred to CF	₹44,861.70 cr	₹1,09,379.64 cr
Closing CF balance	₹5,42,426.96 cr	₹5,68,333.19 cr
Available Realised Equity (ARE)	₹5,71,906.64 cr	₹5,97,812.87 cr
ARE as % of balance sheet	7.5%	6.5%

The Economic Capital Framework (ECF) requires the Contingent Risk Buffer (CRB) to sit within 4.5%–7.5% of the balance sheet (6.0% ± 1.5%). Last year ARE was at the top of the band (7.5%). This year, the Central Board chose to maintain CRB at 6.5%, the level approved for FY26 and made a much larger ₹1.09 lakh crore provision to get there.

Crucially, because the balance sheet itself grew 20.6%, holding the buffer at 6.5% of a much larger base required a far bigger absolute provision. That ₹1.09 lakh crore provision is the single reason the dividend grew only 6.7% even though income grew 26.4%.

The dividend arithmetic

• Net income (available balance): ₹2,86,592 crore

• Surplus transferred to Government: ₹2,86,588 crore (+6.7% vs ₹2,68,590 cr last year)

CFO Bridge angle:  The Government will book a record ₹2.87 lakh crore dividend but the growth was modest because RBI front-loaded its buffer. Prudent reading: with a balance sheet swollen by volatile revaluation gains, a bigger cushion is sensible. Conservative-to-a-fault reading: ₹1.09 lakh crore parked in the CF is money not available for fiscal-deficit reduction or capital spending. The honest framing for clients: this year’s lower dividend growth is a choice, not a constraint.

Why the buffer percentage fell, yet the provision doubled

There is a subtler mechanism behind the larger provision, and it is worth getting right because the intuitive explanation is the wrong way round. Two of the RBI’s unrealised valuation cushions evaporated during the year. The Investment Revaluation Account - Rupee Securities (IRA-RS) fell from a ₹16,843 crore credit to zero, and the Foreign Exchange Forward Contracts Valuation Account (FCVA) fell from a ₹6,985 crore credit to zero and on the forward book a fresh ₹43,403 crore provision (PFCVA) appeared on the liability side. Under the RBI’s own accounting policy, a debit (loss) balance on the forward-contracts valuation account is charged to the Contingency Fund. So the swing from valuation cushion to valuation provision roughly ₹67,000 crore across the two accounts had to be absorbed, which is part of why the headline CF provision more than doubled even as the buffer settled at a lower 6.5% of a much larger balance sheet.

One caution on the cause. It is tempting to say "bond and forward values fell because interest rates rose" but the RBI cut the repo rate 100 bps this year; domestic rates fell. The losses on the forward book are driven mainly by the cost of carrying a large forward dollar position (the interest-rate differential and a depreciating rupee), not by rising Indian rates. Stating it the other way round would be factually wrong.

Revaluation cushion → provision	FY25 (₹ cr)	FY26 (₹ cr)
IRA-RS (rupee securities): credit cushion	16,843	0
FCVA (forward contracts): credit cushion	6,985	0
PFCVA (forward contracts): provision/charge	0	43,403

4. Income Statement Analysis

Item	FY25 (₹ cr)	FY26 (₹ cr)	Change
Interest Income	2,10,688	2,35,580	+11.8%
Other Income	1,27,620	1,92,104	+50.5%
Total Income	3,38,308	4,27,684	+26.4%
Total Expenditure	69,714	1,41,092	+102.4%
Net Income	2,68,594	2,86,592	+6.7%
Surplus to Government	2,68,590	2,86,588	+6.7%

Income: the exchange-gain engine

The 26.4% income jump was led by Other Income (+50.5%), and within that, by exchange gains from foreign exchange transactions of ₹1,68,906 crore (up from ₹1,11,143 crore). In plain terms: RBI realised large gains selling dollars into a depreciating rupee. Add ₹16,354 crore of foreign-securities premium amortisation and ₹3,503 crore of capital gains on foreign securities.

The rate of earnings on Foreign Currency Assets rose to 6.4% (from 5.3%) global rates stayed elevated, lifting yield on the forex book.

The "+102.4% expenditure" optic handle with care

Total expenditure "doubling" is overwhelmingly the CF provision (₹44,862 cr → ₹1,09,380 cr). Excluding provisions, expenditure rose ~27.6% (₹24,852 cr → ₹31,712 cr) but almost all of that increase (~86%) sits in the single Miscellaneous Expenses line. So the right framing is twofold: the 102.4% headline is an artifact of the CF transfer and overstates cost growth, yet the genuine, provision-free cost increase is concentrated almost entirely in the least-disclosed line item.

Expenditure line	FY25 (₹ cr)	FY26 (₹ cr)	Change
Printing of Notes	6,372.82	4,875.20	−23.5%
Employee Cost	9,146.71	10,136.31	+10.8%
Agency Charges / Commission	3,669.56	4,880.05	+33.0%
Miscellaneous Expenses	4,273.56	10,193.96	+138.5%
Provisions (to CF)	44,861.70	1,09,379.64	+143.8%
Total	69,714.02	1,41,091.69	+102.4%
Total ex-provisions	24,852	31,712	~+27.6%

5. Currency Printing: Last Year’s Criticism, Answered

Last year’s analysis flagged a 25% surge in printing costs as a paradox in a digital-payments economy. This year, the cost fell 23.5% to ₹4,875.2 crore RBI reduced the banknote indent (2,81,000 lakh pieces in FY26 vs 3,03,000 in FY25).

Banknotes in circulation still grew (value +11.9%, volume +10.5%) driven by welfare cash transfers by states, post-GST/income-tax-cut consumption, and easing rates. So cash demand is real; RBI simply printed against existing buffers rather than fresh indent.

Denomination mix

• ₹500 remains dominant; 85.5% of value (down marginally from 86.0%), 41.2% of volume.

• ₹2000 is now negligible; 0.1% of value, only 275 lakh pieces left; ~98%+ has returned.

• ₹100 and ₹200 notes gained share in volume.

e₹ (Digital Rupee / CBDC): Circulation actually declined to ₹771.7 crore (from ₹1,016.5 crore). After the initial pilot push, retail CBDC adoption has not scaled, a quiet but notable data point.

CFO Bridge angle:  The currency-printing storyline has flipped from "wasteful surge" to "responsive correction." Credit where due. But the e₹ contraction undercuts the CBDC narrative, worth watching whether the Digital Rupee is finding product-market fit.

6. Employee Cost & "Miscellaneous Expenses"

Employee cost rose 10.8% to ₹10,136.31 crore, and the driver is specific: a pension revision that lifted contributions to staff superannuation funds. The Gratuity & Superannuation Fund on the balance sheet grew from ₹36,471 crore to ₹39,405 crore over the year. The pace is slower than last year’s ~13.8%, but it still outstrips inflation, and pension/superannuation liabilities not headcount or salaries remain the structural cost driver. For an institution that preaches fiscal prudence, the trajectory of its own pension obligations is worth watching.

The new red flag is Miscellaneous Expenses: +138.5% to ₹10,193.96 crore. The report’s only explanation is that the broader "Others" category (remittance, printing & stationery, audit fees, misc.) rose 108.8% to ₹11,817.78 crore with no line-item breakdown of what drove a near-₹6,000 crore jump in a single year.

CFO Bridge angle:  Last year we questioned a 15% rise in "Other Expenses." This year that same opacity multiplied: a 138.5% jump in Miscellaneous Expenses with effectively no disclosure of cost drivers. For an institution that demands granular reporting from every regulated entity, the absence of a breakdown on a ₹10,000+ crore line is a legitimate transparency question.

7. Foreign Investments & Forex Reserves

Forex reserves - headline up, dollar FCA down

Component	FY25 ($ bn)	FY26 ($ bn)	Change
Foreign Currency Assets	567.56	552.28	−2.7%
Gold	78.18	115.40	+47.6%
SDR	18.17	18.62	+2.5%
Reserve Tranche Position	4.42	4.81	+8.8%
Total FER	668.33	691.11	+3.4%

 

The reserve headline ($691 bn, ~11 months’ import cover) is reassuring but the composition shifted. Foreign currency assets (the genuinely deployable, liquid part) fell 2.7% in dollar terms, as RBI sold dollars to defend the rupee. The reserve total rose almost entirely because gold’s dollar value jumped 47.6%. Deployable forex firepower and headline reserves are quietly diverging. In rupee terms FER rose 14.7% (to ₹65.54 lakh crore) again, the weaker rupee inflating the number.

Foreign investments & yield

Total foreign investments rose 7.9% to ₹52.68 lakh crore. Earnings from FCA jumped 26.6% to ₹3,27,655 crore, with the rate of return improving to 6.4% from 5.3%  the clearest "genuine performance" story in the report, reflecting disciplined management against still-elevated global rates.

CFO Bridge angle:  "$691 billion, all-time high" is the headline everyone will run. The CFO-grade observation: liquid FCA actually shrank. If gold corrects, the reserve number falls without a single dollar leaving the country. Always read reserves by composition, not just the top-line.

8. Loans & Advances

Lending rose 9.8% to ₹4,77,219 crore. Within it:

•  Reverse Repo–Foreign (lending to overseas institutions) rose sharply to ₹1,61,993 crore (from ₹1,11,580 crore) the largest mover.

• Loans to Scheduled Commercial Banks were broadly flat (₹2,53,663 → ₹2,56,062 crore).

• Loans to State Governments steady at ~₹32,507 crore; Central Government availment fell to near-zero (WMA/OD interest from the Centre collapsed 98.6%), reflecting comfortable government cash positions and the easing cycle.

The overall picture: domestic liquidity was in surplus all year (average daily LAF net absorption surged to ₹1.86 lakh crore from just ₹1,605 crore), so banks needed little RBI accommodation.

9. Monetary, Payments & Economic Indicators

• Repo rate cut 100 bps during FY26; MPC on a neutral stance since June 2025.

• Headline CPI inflation collapsed to 2.1% in FY26 (from 4.6% the year before) a remarkably benign print, aided by food deflation, and the room that allowed the MPC to cut rates 100 bps. (For context, the FY27 projection is 4.6%, with risks to the upside so this year’s 2.1% looks like a trough, not a new normal.)

• The Centre hit its fiscal-consolidation target, bringing the gross fiscal deficit to 4.4% of GDP in FY26 (RE) below the 4.5% goal. Continued consolidation underpins the bond market and, indirectly, corporate borrowing costs.

• Currency-to-GDP ratio rose marginally (note: this reverses last year’s narrative of a declining cash-to-GDP ratio) driven by welfare cash transfers and post-tax-cut consumption, even as digital payments grew.

• Retail digital payments: +15.1% in value, +26.9% in volume. Volume growth far outpaces value consistent with UPI’s deepening into small-ticket, everyday transactions.

• Counterfeit notes: Total FICN detected was 2,29,746 pieces. Detection at the RBI itself fell to just 5,412 (2.4% share, down from 4.7%). But fake ₹500 notes rose ~20.5% to 1,41,907 pieces the ₹500’s dominance makes it the prime counterfeiting target.

• e₹ in circulation declined to ₹771.7 crore.

10. The External Sector

The external position stayed comfortable, but with a telling strain beneath the surface. The current account deficit (CAD) was contained at $30.2 billion, just 1.1% of GDP for April–December 2025 (down from $36.7 billion, 1.3%, a year earlier). The buffer was services: buoyant net services receipts and workers’ remittances largely offset a widening merchandise-trade deficit. In other words, India’s software and services exports are again subsidising its goods-trade gap.

The strain shows in the financing. Net capital flows fell short of financing the CAD during April–December 2025, and forex reserves were drawn down by about $30.8 billion on a balance-of-payments basis over the period driven by FPI equity outflows. This is the flip side of the "record reserves" headline: the rupee value of reserves rose on gold revaluation even as the country was, in cash-flow terms, a net drawer on its external buffers. The merchandise-trade deficit with China and Switzerland in particular widened.

CFO Bridge angle:  A 1.1%-of-GDP current account deficit is genuinely healthy, and remittances plus services remain India’s external shock-absorber. But the BoP-basis reserve drawdown and the FPI outflows are the early-warning lights: the headline reserve number is being flattered by gold revaluation while the underlying capital account is under pressure. For any business with import exposure or foreign-currency funding, this reinforces the case for hedging rather than relying on the comfort of a big reserve headline.

11. Financial Allocations & Governance

•    ₹1,09,379.64 crore provisioned to the Contingency Fund (the year’s defining allocation).

•    No provision to the Asset Development Fund (balance held at ₹22,974.68 crore) RBI continues to prioritise liquidity/risk buffers over ADF.

•    ECF revised in May 2025 the framework under which the CRB band and ARE target operate was internally reviewed and re-approved by the Central Board, enabling this year’s buffer normalisation to 6.5%.

•    Contingent liabilities of just ₹1,159 crore (mainly uncalled BIS share liability) negligible.

•    A new Economic Stabilisation Fund (ESF) is being set up by the Government to provide fiscal space against global headwinds worth tracking for next year.

12. Policy & Economic Outlook (FY 2026-27)

Indicator	FY27 Projection	Risk bias
Real GDP growth	6.9%	Tilted downside
CPI inflation	4.6%	Tilted upside

 

Growth supports: Government capex thrust, resilient corporate and bank balance sheets, Union Budget 2026-27 measures, special assistance to states for capital investment.

Key risks: West Asia / geopolitical escalation, global fuel and commodity price spikes, exchange-rate volatility, possible El Niño and above-normal summer temperatures affecting food inflation, and continued FPI equity outflows. The MPC has signalled it will hold the neutral stance, retaining flexibility on the repo rate as the growth-inflation balance evolves.

The shape of growth matters as much as the rate. The economy remains services-led the services sector contributed roughly 69% of real GVA growth this year. Manufacturing, though, is accelerating: real manufacturing GVA grew 11.5% (from 9.3% a year ago), helped by the Production-Linked Incentive (PLI) scheme and the National Manufacturing Mission. With global merchandise-trade volume rebounding to 4.6% (from 2.7% the prior year), there is a genuine window for India to convert its manufacturing push into export share.

13. Year-over-Year Scorecard (FY25 → FY26)

Metric	FY25	FY26	Change	The real story
Balance sheet size	₹76.25 L cr	₹91.97 L cr	+20.6%	Mostly revaluation
Gold value	₹6.68 L cr	₹10.94 L cr	+63.8%	Price, not purchase (+0.94 MT)
Total income	₹3.38 L cr	₹4.28 L cr	+26.4%	Exchange gains on weak ₹
Surplus to Govt	₹2.69 L cr	₹2.87 L cr	+6.7%	Capped by ₹1.09 L cr CF provision
CF provision	₹0.45 L cr	₹1.09 L cr	+143.8%	The dividend’s silent ceiling
ARE (% of B/S)	7.5%	6.5%	−100 bps	Deliberate buffer normalisation
Printing cost	₹6,373 cr	₹4,875 cr	−23.5%	Last year’s critique, corrected
Misc expenses	₹4,274 cr	₹10,194 cr	+138.5%	The new opacity flag
Forex reserves	$668 bn	$691 bn	+3.4%	But liquid FCA fell 2.7%
CPI inflation	4.6%	2.1%	−250 bps	Benign trough; FY27 seen at 4.6%
Current account deficit	1.3% GDP	1.1% GDP	narrowed	Services offset goods gap
Repo action	-	−100 bps	Easing	Neutral stance held

 

Source Note & Data Caveats

• All FY26 figures and their FY25 comparatives in the analysis sections are taken solely from the RBI Annual Report 2025-26, Chapter XII (The Reserve Bank’s Accounts for 2025-26), the audited Balance Sheet and Income Statement as on/for the year ended March 31, 2026, supporting Schedules 1-15, and Chapters I (Assessment & Prospects) and VIII (Currency Management). No web search or third-party data was used.

• The "Bimal Jalan" reference in Section 3 is contextual: the report itself refers to "the Expert Committee to Review the Extant Economic Capital Framework," which Bimal Jalan chaired.

• The signatories to the FY26 financial statements indicate the current Deputy Governor line-up has changed from last year’s deck (the statements are signed by Rohit Jain and Shirish Chandra Murmu alongside Poonam Gupta and Swaminathan J, with Sanjay Malhotra as Governor)

• Audited by Sorab S. Engineer & Co. and Kalyaniwalla & Mistry LLP; auditors’ report dated May 22, 2026.