Budget 2026: Govt may peg Rs 2-3 lakh crore as dividend income from RBI, PSU banks

Dividend

• Govt may budget Rs 2-3 lakh crore dividend from RBI, PSBs in 2026
• Higher dividends expected due to strong PSU bank profits and RBI's dollar sales
• Dividend transfers boost non-tax revenue, supporting fiscal consolidation goals.

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The government is expected to budget Rs 2-3 lakh crore as dividend income from the Reserve Bank of India (RBI) and public sector banks (PSBs) in the Union Budget 2026, higher than the Rs 2.56 lakh crore estimated in the previous budget, according to a Moneycontrol poll of economists, treasury heads, and market participants.

The higher dividend projection is likely to be supported by the strong balance sheets of public sector banks and heightened volatility in currency markets, which has resulted in heavy dollar sales by the RBI, boosting its surplus income, poll respondents said.

“Robust PSU bank profitability and the government’s fiscal consolidation goals further strengthen the case, while easing borrowing pressures in FY26,” said Balasubramanian R, Head Of Treasury at Dhanlaxmi Bank.

The dividend estimate to be made in Budget 2026 will accrue in FY27, in line with the government’s accounting framework. The dividend projected in the earlier budget will be realised after the end of the current financial year, as banks typically declare and transfer dividends after finalising their annual results. The RBI, meanwhile, generally transfers its surplus to the government in May.

In May 2025, the central bank paid a record Rs 2.69 lakh crore dividend to the government, reflecting higher income from foreign exchange operations amid global market volatility.

Dividend transfers from the RBI and PSBs have emerged as a key source of non-tax revenue for the government in recent years, helping provide fiscal headroom even as capital expenditure remains a priority.

In financial year 2024-25, the central bank net sold $69.661 billion, and purchased $25.15 billion. Such heightened selling of dollars may have increased the revenue for the central bank.

The logic implies that like in any commercial transaction, the RBI accumulated dollars cheap and sold it when the price rose. The central bank accumulated dollars in the 83-84 range a dollar and sold in the 84-87 range.

The RBI dividend is a major revenue source for the government. As the manager of its finances, the RBI pays a dividend to the government to help from its surplus profit.