RBI Annual Report FY26: West Asia War Tops Risk List, Balance Sheet Expands 20.6%

The Reserve Bank of India released its Annual Report for 2025-26 on 29 May 2026 and named the ongoing West Asia conflict as the single biggest threat to the global and Indian growth outlook. The central bank, however, said India remained relatively resilient because of strong corporate and bank balance sheets, sustained government capital spending and the implementation of new trade agreements.

The RBI retained its real GDP growth projection for 2026-27 at 6.9 per cent, in line with the Monetary Policy Committee's April estimate. It warned that a long-drawn conflict could push up crude oil prices, disrupt shipping routes through the Strait of Hormuz and revive inflationary pressures. The International Monetary Fund has already cut its global growth forecast to 3.1 per cent for 2026 and lifted its global inflation projection to 4.4 per cent.

The report also showed that the RBI's balance sheet grew 20.6 per cent during 2025-26, rising by Rs 15.7 lakh crore to Rs 91.9 lakh crore as on 31 March 2026. Measured against GDP, the balance sheet moved up to 26.4 per cent from 23.7 per cent a year earlier. The expansion was driven mainly by valuation gains from a sharp rally in gold prices and the depreciation of the rupee. Domestic investments rose 44.9 per cent, gold 63.8 per cent and foreign investments 7.9 per cent on the asset side.

On the liabilities side, revaluation accounts, currency in circulation and deposits grew by 63.4, 11.8 and 11.6 per cent respectively. The Central Board approved a transfer of Rs 1.09 lakh crore to the Contingent Risk Buffer, sharply higher than Rs 44,862 crore the year before, even as the buffer's share of the balance sheet eased to 6.5 per cent within the permitted 4.5-7.5 per cent band of the Economic Capital Framework.