RBI's ₹76.3 Trillion Balance Sheet: What It Means for India’s Economy
RBI’s Risk Buffer Strategy Signals Long-Term Financial Resilience
In a recent report, ICICI Bank highlighted that the Reserve Bank of India’s (RBI) decision to maintain higher risk buffers will significantly strengthen its balance sheet while providing a stable foundation for India's macroeconomic outlook. This comes at a time when global oil prices are anticipated to stay benign, offering additional support to India’s inflation and fiscal management efforts.
According to the report, the RBI’s robust risk buffers not only enhance its financial resilience but also act as a macroeconomic tailwind. ICICI Bank noted:
“We believe higher risk buffer by RBI strengthens its balance sheet and provides a tailwind for India’s macroeconomic fundamentals when oil prices too are expected to be benign.”
RBI’s Balance Sheet Expands at a Slower Pace Than GDP Growth
The RBI’s balance sheet grew to ₹76.3 trillion in FY25, marking an 8.2% increase from the previous fiscal year. However, when compared to India’s nominal GDP growth of 40% since FY22, the balance sheet growth of 23% appears moderate.
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FY2019–2022 (Pandemic years):
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RBI balance sheet growth: 50%
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Nominal GDP growth: 25%
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Post-pandemic period (FY22–FY25):
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RBI balance sheet growth: 23%
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Nominal GDP growth: 40%
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The report predicts that the central bank's balance sheet will expand in line with or faster than nominal GDP in the coming years, thanks to an accommodative policy stance and rising asset values.
Domestic Securities and Gold Drive Asset Growth in FY25
The expansion of RBI’s balance sheet in FY25 was largely driven by a rise in domestic securities, which increased 14.3% year-on-year to ₹15.6 trillion.
On the foreign securities front, growth was more modest at 1.7% year-on-year, reaching ₹48.8 trillion, primarily due to muted foreign investment flows.
The most notable asset-side growth came from gold holdings, which rose by a substantial 52% year-on-year to ₹6.7 trillion. The RBI added 57 tonnes of gold during the fiscal year, indicating a strategic shift in asset composition amidst global economic uncertainties.
Liabilities Led by CGRA Surge and Currency Movements
On the liabilities side, the Currency and Gold Revaluation Account (CGRA) recorded a 15.2% year-on-year increase to ₹13 trillion. This growth was attributed to:
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A rise in global gold prices
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Depreciation of the Indian rupee
This revaluation boost reflects the RBI’s improved position due to favorable global asset revaluations.
Forex Operations Yield Higher Revenue Despite Narrower Spread
The RBI earned ₹1.1 trillion from its foreign exchange operations in FY25, marking a 33% increase over FY24. The total volume of gross sales and purchases stood at ₹65 trillion, up from ₹29 trillion in the previous year.
However, the average spread narrowed from 2.9% in FY24 to 1.7% in FY25, primarily due to a lower average rupee depreciation (2.1% this year vs. 3% last year). This suggests efficient currency management despite reduced arbitrage opportunities.
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Strengthening of Rupee Amid Global Dollar Weakness
ICICI Bank’s report also pointed to a fundamental shift in the foreign exchange outlook. The US Dollar Index has fallen by 8.3% in 2025 so far, a reversal from the strong dollar environment last year driven by U.S. economic “exceptionalism.”
This has improved the position of emerging market currencies, including the Indian rupee, which has shown resilience and relatively stable performance in global currency markets.
98.26% of Rs 2000 Banknotes Returned to RBI
In a major update, the RBI announced that 98.26% of ₹2000 denomination banknotes—withdrawn from circulation in May 2023—have now been returned.
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As of May 19, 2023: ₹2000 notes in circulation = ₹3.56 lakh crore
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As of May 31, 2025: ₹2000 notes in circulation = ₹6,181 crore
This indicates that over ₹3.5 lakh crore worth of high-denomination notes have been returned or exchanged over two years.
Public Exchange and Deposit Facilities Remain Open
The RBI continues to offer services for exchange and deposit of ₹2000 notes through its 19 Issue Offices across cities such as:
Ahmedabad, Bangalore, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, and Thiruvananthapuram.
Additionally, individuals can also send ₹2000 notes via India Post to these offices for credit to their bank accounts.
₹2000 Notes Remain Legal Tender
Despite the withdrawal, the RBI reiterated that ₹2000 banknotes continue to be legal tender, meaning they are still accepted for transactions, although actively being phased out.
Introduced post-demonetization in November 2016, the ₹2000 note served as a stop-gap solution to restore currency availability. Printing was stopped in 2018–19 once lower denomination notes became adequately circulated.
Conclusion
The ICICI Bank report underscores the RBI’s prudent financial management, reflected in growing risk buffers, strategic asset allocations, and timely policy actions like the controlled withdrawal of ₹2000 notes. These moves not only fortify the RBI’s balance sheet but also help anchor India’s macroeconomic stability amidst evolving global dynamics.
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