RBI Balance Sheet Shifts As FX Share Falls To A Decade Low

The Reserve Bank of India's balance sheet does not usually invite close reading. It grows, reserves grow, and the two are assumed to move together. For most of the past decade, that assumption held. But it may be starting to fray.

Using RBI's Weekly Statistical Supplement data for the last reporting week of March each year, this author tracks the balance sheet from 2016 to 2026. Over this period, it has expanded from about ₹32 trillion to nearly ₹91 trillion. Foreign currency assets, the largest component, have increased from roughly ₹22 trillion to more than ₹52 trillion. At an aggregate level, this suggests the balance sheet has largely moved in line with India's foreign exchange reserves. Look closer, though, and a different story is emerging.

Shifting Weights
In 2015-16, foreign currency assets accounted for about 69% of the balance sheet. In the years that followed, this share remained broadly stable, generally moving within a range of 67% to 73.2% through 2023-24. Since then, a shift is visible. It declined to around 64% in 2024-25 and further to below 58% in the next year.

This shift is not driven by a fall in reserves. Foreign currency assets have continued to rise in absolute terms — from about ₹39.5 trillion in 2020-21 to over ₹52.5 trillion in 2025-26. The change is relative, with other components of the balance sheet expanding faster in recent years.

Gold is one such component. For most of this period, gold accounted for roughly 4% to 6% of the balance sheet. This changed more recently, with its share rising to about 6% in 2023-24, increasing to nearly 9%, and reaching over 12% in 2025-26. In absolute terms, gold holdings increased from about ₹2.5 trillion in 2020-21 to nearly ₹11 trillion in 2025-26.

Domestic securities show a similar pattern, though the shift is less uniform. Their share remained broadly within the range of around 19% to 24% through most of the period up to 2024-25, before rising to over 25% in the last fiscal year. In absolute terms, holdings of government securities increased from about ₹13.3 trillion in 2020-21 to nearly ₹23 trillion in 2025-26.

Taken together, these movements indicate a change in the composition of the central bank's balance sheet. Foreign currency assets remain the dominant component, but their share has declined in recent years whilst gold and domestic securities account for a larger proportion than before.

The data does not, by itself, explain why this shift has taken place. A combination of factors likely contributes. The pace of increase in foreign currency assets has moderated at times, reflecting periods of foreign exchange intervention and valuation changes. Gold holdings have risen, both due to accumulation and higher prices. On the domestic side, increased holdings of government securities are consistent with the RBI's liquidity operations and its role in managing government borrowing.

These changes matter because different assets reflect different underlying dynamics. A balance sheet dominated by foreign currency assets is closely linked to external sector developments and exchange rate management. A higher share of domestic securities strengthens the link to domestic liquidity conditions and government borrowing. Gold introduces an additional component with its own valuation and risk characteristics.

For much of the period covered here, movements in the RBI's balance sheet broadly tracked foreign exchange reserves. That relationship has not broken down, but it is less determinative than before. FX assets remain the largest item, yet at 58% they now share the page with a central bank that holds more gold and more domestic paper than it once did. Whether by design or accumulation, the balance sheet is telling a more complicated story.