RBI’s Rs 2.86 lakh cr dividend draws debate; Deepak Shenoy calls payout ‘disappointing’

The Reserve Bank of India’s record dividend transfer of Rs 2.86 lakh crore to the central government has triggered widespread debate among economists and market participants. While the payout marks the highest surplus transfer in RBI’s history, Capital Mind CEO and SEBI-registered portfolio manager Deepak Shenoy has questioned whether the central bank could have shared more with the government.

In a post on social media platform X on Friday, Shenoy described the dividend as “a little disappointing,” arguing that despite reporting nearly Rs 4 lakh crore in profits, the RBI chose to allocate a significant portion to its Contingent Risk Buffer (CRB) instead of transferring a larger amount to the government.

The CRB is a reserve maintained by the RBI to safeguard against unexpected financial shocks, market volatility, and systemic risks. It acts as a cushion during periods of economic stress and forms a part of the central bank’s broader risk management framework.

Shenoy questioned the need for such a large reserve, arguing that the risk buffer has not historically been used. “A little disappointing that RBI has given just Rs 2.86 lakh crore as a dividend to the government. They had nearly Rs 4 lakh crore of profit. And yet, chose to keep a substantial portion of it into their CRB — a risk buffer they have never had to use ever, and won’t,” he wrote.

The fund manager also expressed concerns over what he described as an “extremely bloated” RBI balance sheet. He suggested the central bank consider selling part of its gold holdings and reducing its balance sheet size, potentially allowing for higher payouts in the future.

“But these hopes, they just remain hopes. We deserve better,” Shenoy added.

His remarks quickly sparked reactions online, with several users defending RBI’s cautious approach. Some pointed out that unprecedented global events in recent years justify maintaining strong financial buffers.

“Never had to use it… but sir, what if they do? All kinds of unprecedented things are happening in our lifetime,” one user responded, emphasizing the importance of maintaining reserves in uncertain times.

Another commenter defended the RBI’s growing gold reserves, arguing that central banks hold gold primarily as a strategic asset. “Gold is sold when a house is in crisis, not because the balance sheet is bloated,” the user wrote.

RBI’s dividend payout

Meanwhile, RBI’s dividend transfer is expected to provide fiscal support to the government as it begins FY2026-27 amid global uncertainties and elevated energy prices. The transfer exceeds last year’s ₹2.69 lakh crore, although it remains below the government’s broader budget estimate of ₹3.16 lakh crore from RBI surplus and PSU dividends combined.

The payout comes at a challenging time marked by geopolitical tensions in West Asia, rising crude oil prices above $100 per barrel, rupee weakness, and heavy foreign investor outflows. So far this year, foreign portfolio investors (FPIs) have withdrawn ₹2.22 lakh crore from Indian equities, increasing pressure on the currency. The rupee recently touched a record low of 96.90 per US dollar before RBI intervention helped stabilize it.

RBI’s financial performance remained strong. Gross income rose 26.42%, while its balance sheet expanded 20.61% to ₹91.97 lakh crore. The central bank allocated ₹1.09 lakh crore toward its Contingent Risk Buffer (CRB), more than double last year’s amount, strengthening its ability to respond to future financial and market shocks.

Economists believe the transfer provides support for government spending and fiscal management. However, concerns remain over higher fuel and fertilizer subsidy requirements, weaker tax collections, and elevated oil prices. Some analysts expect the fiscal deficit to exceed the budget target of 4.3% of GDP, particularly if crude prices remain elevated.

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