RBI Balance Sheet Expands 20.6% in FY26 on Gold Revaluation and Weaker Rupee

The Reserve Bank of India's balance sheet grew by 20.6 per cent in financial year 2025-26, lifted mainly by valuation gains on its gold holdings and a weaker rupee against the US dollar. The figures were released in the central bank's annual report on 30 May 2026.

In absolute terms, the balance sheet expanded by 15.7 trillion rupees to reach 91.9 trillion rupees as of 31 March 2026. Measured against the size of the economy, the balance sheet now stands at 26.4 per cent of GDP, compared with 23.7 per cent a year earlier. This is a meaningful rise and reflects the central bank's larger footprint in foreign exchange, gold and government securities markets during the year.

On the asset side, the major drivers were a 44.9 per cent rise in domestic investments, a 63.8 per cent jump in gold holdings and a 7.9 per cent increase in foreign investments. On the liability side, revaluation accounts grew by 63.4 per cent, notes issued were up 11.8 per cent and deposits rose by 11.6 per cent. Most of the expansion came from valuation effects on gold and on foreign currency reserves, not new flows.

According to economists, gold prices jumped close to 50 per cent during the year and the rupee saw a sharp depreciation, both of which inflate the rupee value of these reserves on the books. Liquidity injection through open market purchases of government securities worth about 8.8 trillion rupees was the second important factor that pushed up the balance sheet size.

The central bank had earlier announced a record dividend transfer of 2.87 trillion rupees to the Centre for FY26, higher than the 2.68 trillion rupees transferred a year ago. The RBI's central board also moved 1.09 trillion rupees into the Contingent Risk Buffer, sharply higher than the 44,862 crore rupees set aside in FY25. Even so, the Contingent Risk Buffer as a share of the balance sheet declined to 6.5 per cent from 7.5 per cent, since the balance sheet expanded so quickly. The Economic Capital Framework allows the buffer to be maintained in a band of 4.5 to 7.5 per cent.

As of 15 May 2026, India's total foreign exchange reserves stood at .9 billion, an increase of billion over the year. While 79 per cent of these reserves remained in foreign currency assets, the share of gold has steadily risen, accounting for 17 per cent of total reserves, against just 12 per cent a year earlier. The trend reflects a deliberate shift towards holding more gold as a hedge against currency and geopolitical risks.