RBI Annual Report FY 2025-26: Government Accounts, e-Kuber & Foreign Exchange Reserves — Part 24

RBI Annual Report FY 2025-26 explains RBI’s role as banker to governments, e-Kuber integration, Aadhaar-based DBT, CBDC government payments and foreign exchange reserve management.

The RBI Annual Report FY 2025-26 highlights two important but distinct functions of the Reserve Bank: managing government banking and payment systems, and managing India’s foreign exchange reserves. Through the Department of Government and Bank Accounts (DGBA), RBI acts as banker to governments and supports increasingly integrated digital government payments through e-Kuber, NEFT/RTGS, PFMS, NPCI and Aadhaar-based DBT. At the same time, the Department of External Investments and Operations (DEIO) manages foreign exchange reserves with emphasis on stability, safety, liquidity, diversification and risk management. These topics are particularly relevant for the RBI Grade B Promotion Exam, Grade B, UPSC, banking examinations and interviews because they combine institutional functions with highly testable operational details.


1. RBI as Banker to Governments

The:

Department of Government and Bank Accounts (DGBA)

manages RBI’s functions as:

  • Banker to banks
  • Banker to governments
  • Manager of RBI’s internal accounts
  • Formulator of RBI’s accounting policies.

This makes DGBA an important bridge between the government financial system and RBI’s payment infrastructure.


2. Why Government Payment Systems Matter

Government transactions involve enormous volumes of:

  • Tax receipts
  • Government expenditure
  • Subsidies
  • Salaries
  • Pensions
  • Centrally Sponsored Schemes
  • Transfers to states
  • Other government payments.

The policy direction during FY 2025-26 was therefore towards:

Digitalisation → integration → real-time processing → just-in-time payments → lower operational friction

RBI continued integrating government systems with e-Kuber, while also strengthening electronic payment and reporting systems.


3. Aadhaar-Based DBT Through e-Kuber

One of the important goals for FY 2025-26 was implementation of Centrally Sponsored Scheme (CSS) payments through:

Aadhaar-based Direct Benefit Transfer (DBT)

using:

NPCI’s Aadhaar Payment Bridge System (APBS)

The architecture involved integration among:

  • e-Kuber
  • NPCI
  • Central Government systems
  • State Government systems.

4. How Aadhaar-Based Government Payments Work

During FY 2025-26:

26 States and 3 Union Territories went live for Aadhaar-based DBT payments under CSS.

Under this arrangement:

  1. State Governments send Aadhaar-based payment files directly to NPCI.
  2. NPCI processes the files.
  3. RBI effects the gross fund settlement.

Exam Point

Remember the division:

State Government → payment file

NPCI → processing

RBI → gross fund settlement


5. All States and Three UTs Integrated for CSS

During the year, CSS payments through NEFT/RTGS were implemented for:

  • Nagaland
  • Puducherry
  • Jammu
  • NCT of Delhi.

With this:

All 28 State Governments and 3 UTs were live in CSS.

This enabled:

Just-in-time payments

through tripartite integration among:

e-Kuber + PFMS + State Government systems

where:

  • e-Kuber = RBI’s platform
  • PFMS = Public Financial Management System
  • State system = concerned government financial system.

6. What Is the Significance of Just-in-Time Payments?

Traditional government payment systems may involve maintaining funds at different levels before actual expenditure.

The integrated e-Kuber architecture supports:

Just-in-time release of funds

This improves:

  • Fund management
  • Payment efficiency
  • Transparency
  • Government cash management
  • Integration between Centre and States.

The important exam phrase is:

e-Kuber + PFMS + State Government systems → just-in-time CSS payments.


7. Online Memorandum of Error for GST Receipts

RBI also expanded digital processing of government receipts.

The governments of:

  • Mizoram
  • Nagaland
  • Meghalaya
  • NCT of New Delhi

were onboarded for online processing of:

Memorandum of Error (MoE)

related to GST receipts.

As a result:

26 State Governments and 3 UTs were live for online MoE.


8. Government Payment Dashboards and IFSC Synchronisation

RBI introduced additional technology-enabled facilities for government payment systems.

Dashboard facility

9 State Governments + 2 UTs were onboarded.

IFSC synchronisation

12 State Governments were onboarded.

These initiatives were intended to improve the efficiency and monitoring of government financial transactions.


9. e-Kuber and Defence Pension Recovery

Another operational improvement involved recovery of excess pension payments made to defence pensioners.

RBI enabled a direct:

NEFT/RTGS receipt model

through integration between:

  • e-Kuber
  • SPARSH

SPARSH is the:

System for Pension Administration (Raksha)

of the Controller General of Defence Accounts (CGDA).

Exam Chain

e-Kuber + SPARSH → recovery of excess defence pension through direct NEFT/RTGS receipt model


10. Inter-Government Adjustment Advice

RBI also initiated migration of:

Inter-Government Adjustment Advice (IGAA)

to the enhanced version of:

e-payments in e-Kuber.

The 2026-27 agenda includes further migration of IGAA into the enhanced e-Kuber e-payment system.


11. CBDC in Government Payments

One of the most interesting developments is the integration of:

Central Bank Digital Currency (CBDC)

into government payments.

e-Kuber now enables government payments through CBDC under the:

Treasury Single Account (TSA) framework.

Government departments onboarded with NPCI can process CBDC payments through e-Kuber, with:

RBI acting as the sponsor bank.


12. Programmable CBDC for Government Payments

The government-payment architecture leverages the existing:

Aadhaar Payment Bridge System model

with:

Aadhaar number as the unique identifier.

Government payments can therefore be released in the form of:

  • CBDC
  • Programmable CBDC tokens.

Why this matters

This links three important RBI technology themes:

e-Kuber + CBDC + programmable payments

The significance goes beyond digital money. Programmability can potentially allow payments to be structured around defined conditions or purposes.


13. Government Payment System: Complete Architecture

For examination purposes, remember the architecture as:

Government Department
↓
e-Kuber
↓
NPCI / PFMS / State Government systems
↓
NEFT / RTGS / APBS / CBDC
↓
Beneficiary

The precise route depends upon the payment mechanism involved.

This is the larger digital transformation taking place in government banking.


14. Agency Bank Commission

RBI pays:

Agency commission

to Agency Banks for conducting government banking business.

During FY 2025-26, agency commission rates were revised with effect from:

April 1, 2025

The framework also decided that:

  • Agency commission rates would be reviewed once every three years.
  • Commission would be paid on all payment transactions handled by Agency Banks, except transactions that are pre-funded or where the Government provides other compensation to Agency Banks.

Exam Point

Agency commission → government banking business conducted by Agency Banks.


15. Continuous Clearing of Government Cheques

RBI continued modernising government cheque processing.

Phase 1 of:

Continuous Clearing in the Cheque Truncation System (CTS)

was implemented on:

October 4, 2025

For government cheques, the settlement period was reduced from:

T+1 → same day.

This was part of the broader payments-modernisation agenda.


16. Centralised Inward Clearing

Another important initiative was:

Centralised Inward Clearing (CIC)

implemented from:

March 2, 2026.

Its objectives include:

  • Improving processing efficiency
  • Reducing operational risk
  • Reducing human-resource requirements.

Under CIC:

Banking Department, Chennai functions as the service branch for all RBI Regional Offices.

High-Probability Question

Which RBI office functions as the service branch under Centralised Inward Clearing?

Answer: Banking Department, Chennai.


17. 2026-27 Government Accounts Agenda

The DGBA’s 2026-27 priorities include:

  1. Migration to online reporting of government payments and amendments.
  2. Migration of IGAA to the enhanced e-payment system in e-Kuber.
  3. Enabling e-Kuber for government DBT payments through Treasury Single Accounts.

The direction is therefore clear:

More online reporting + more e-Kuber integration + more digital DBT.


18. Managing India’s Foreign Exchange Reserves

The second major subject of this part is:

Foreign Exchange Reserve Management

The relevant RBI department is:

Department of External Investments and Operations (DEIO).

During FY 2025-26, DEIO continued managing India’s foreign exchange reserves in accordance with the broader principles of reserve management.


19. Foreign Exchange Reserves: FY 2025-26 Performance

The Annual Report states that foreign exchange reserves:

increased by 3.4% during 2025-26.

This was the same rate of increase recorded in the previous year.

At the same time, RBI continued efforts to diversify reserve deployment by exploring:

  • New asset classes
  • New jurisdictions
  • Different deployment opportunities for foreign-currency assets.

20. Three Core Principles of Reserve Management

The Annual Report explicitly highlights three priorities amid heightened global uncertainty:

1. Stability

Reserves must support confidence in India’s external sector.

2. Safety

Capital preservation and prudent risk management are critical.

3. Liquidity

Assets should remain sufficiently liquid when reserves are required.

Therefore:

Safety + Liquidity + Stability

should be your first memory trigger for RBI foreign-exchange reserve management.


21. Diversification of Foreign Currency Assets

Reserve management is not simply about accumulating foreign currency.

RBI also seeks to optimise the deployment of foreign currency assets by examining:

  • Asset classes
  • Jurisdictions
  • Risk characteristics
  • Liquidity
  • Returns.

During FY 2025-26, this diversification continued despite heightened global uncertainty.


22. International Cooperation in Reserve Management

DEIO’s 2025-26 agenda included strengthening RBI’s leadership role through:

  • Collaborative reserve-management approaches on multilateral platforms.
  • Developing RBI as a centre of excellence capable of providing training and handholding to other central banks.

This shows that reserve management has both:

operational and international knowledge-sharing dimensions.


23. Bilateral Swap Lines

As part of international reserve-management cooperation, RBI organised a focused discussion on:

Bilateral Swap Lines (BSLs)

with central banks of the ASEAN region on:

October 17, 2025.

What is the conceptual purpose?

A currency swap arrangement can provide access to another currency during periods of stress, strengthening liquidity support and financial resilience.

For the examination, remember:

BSL discussion → ASEAN central banks → October 17, 2025.


24. “Resilient Reserves” International Conference

DEIO organised an international conference titled:

“Resilient Reserves: Anchoring Stability in an Era of Uncertainty”

on:

March 5–6, 2026.

The conference took place against the backdrop of escalating conflict in West Asia.

A key theme was:

greater central-bank coordination to navigate uncertainty and ensure reserve resilience.


25. Credit Risk Management of RBI’s Investments

Reserve management also involves managing the credit risk of RBI’s investments.

During FY 2025-26, RBI:

  • Comprehensively reviewed its credit-risk policy.
  • Followed international best practices.
  • Focused on critical risk metrics.
  • Developed online dashboards for credit-risk management.

These dashboards provide:

real-time visibility into the credit profile of RBI’s investments

and support dynamic, data-driven risk assessment.


26. Technology in Reserve Management

This is a useful conceptual point.

RBI is moving from:

Periodic risk review

towards:

Real-time data + dashboards + dynamic risk assessment

The use of technology therefore complements traditional reserve-management principles.

The objective is not technology for its own sake.

It is:

better information → faster risk assessment → better portfolio decisions.


27. Foreign Exchange Reserve Management: 2026-27 Agenda

For 2026-27, DEIO plans to:

Diversify more

Increase focus on diversification of foreign-currency assets in response to geopolitical and economic-policy uncertainty.

Improve risk-return balance

Optimise risks while improving returns.

Improve disclosures

Strengthen data dissemination and disclosure mechanisms.

Upgrade systems

Modernise reserve-management systems and processes for better risk management.


28. Government Accounts vs Foreign Exchange Reserves

A common examination mistake is to mix up the departments and their functions.

AreaDepartmentMain Function
Government bankingDGBABanker to governments and government accounts
Foreign exchange reservesDEIOManagement of foreign exchange reserves
Core RBI banking platforme-KuberGovernment and other RBI banking operations
Government DBTe-Kuber + NPCI/PFMS/State systemsDigital government payments
Reserve risk managementDEIOCredit-risk, diversification and portfolio management

29. Most Important Numbers and Dates

TopicFigure / Date
Foreign exchange reserves growth in FY 2025-263.4%
States + UTs live in CSS28 States + 3 UTs
Aadhaar DBT rollout26 States + 3 UTs
Online GST MoE26 States + 3 UTs
Dashboard onboarding9 States + 2 UTs
IFSC synchronisation12 States
Agency commission revisionApril 1, 2025
Agency commission review cycleEvery 3 years
Continuous CTSOctober 4, 2025
Government-cheque settlementT+1 → same day
Centralised Inward ClearingMarch 2, 2026
CIC service branchBanking Department, Chennai
BSL discussionOctober 17, 2025
Resilient Reserves ConferenceMarch 5–6, 2026
All States/3 UTs live in CSS28 + 3

30. High-Probability Exam Questions

Q1. Which RBI department acts as banker to governments?

Department of Government and Bank Accounts (DGBA).

Q2. Which department manages India’s foreign exchange reserves?

Department of External Investments and Operations (DEIO).

Q3. How much did India’s foreign exchange reserves increase during FY 2025-26?

3.4%.

Q4. How many States and UTs went live for Aadhaar-based DBT under CSS?

26 States and 3 UTs.

Q5. Which system was used for Aadhaar-based DBT?

NPCI’s Aadhaar Payment Bridge System (APBS).

Q6. Which three systems were integrated for just-in-time CSS payments?

e-Kuber + PFMS + respective State Government systems.

Q7. By FY 2025-26, how many States and UTs were live in CSS?

All 28 States and 3 UTs.

Q8. What was the settlement improvement under continuous clearing of government cheques?

T+1 to same day.

Q9. When was Phase 1 of continuous CTS implemented?

October 4, 2025.

Q10. When did Centralised Inward Clearing become effective?

March 2, 2026.

Q11. Which RBI office acts as the service branch under CIC?

Banking Department, Chennai.

Q12. What are the three key reserve-management priorities highlighted by RBI?

Stability, safety and liquidity.

Q13. What was the theme of DEIO’s March 2026 international conference?

“Resilient Reserves: Anchoring Stability in an Era of Uncertainty.”

Q14. When was the conference held?

March 5–6, 2026.

Q15. What is the role of the online dashboards developed for reserve management?

To provide real-time visibility into the credit profile of RBI’s investments and enable data-driven dynamic risk assessment.


31. One-Minute Revision Sheet

DGBA → banker to governments + banker to banks + internal accounts + accounting policies

Aadhaar DBT → APBS

Aadhaar DBT rollout → 26 States + 3 UTs

CSS coverage → 28 States + 3 UTs

Just-in-time payments → e-Kuber + PFMS + State systems

Government payment processing → NPCI + RBI settlement

GST MoE → 26 States + 3 UTs

Dashboard → 9 States + 2 UTs

IFSC synchronisation → 12 States

Agency commission → revised April 1, 2025

Agency commission review → every 3 years

Continuous CTS → October 4, 2025

Government cheque settlement → T+1 → same day

CIC → March 2, 2026

CIC service branch → Chennai

CBDC government payments → e-Kuber + TSA

CBDC government payment identifier → Aadhaar

DEIO → foreign exchange reserve management

FY26 reserve growth → 3.4%

Reserve principles → stability + safety + liquidity

BSL discussion → October 17, 2025

Resilient Reserves Conference → March 5–6, 2026

2026-27 reserve focus → diversification + risk optimisation + disclosure + upgraded systems


32. Cause → Development → Effect → Significance

Government Accounts

Cause: Government payment systems require efficient, integrated and increasingly digital processing.

Development: RBI expanded e-Kuber integration with NPCI, PFMS and State Government systems.

Effect: Greater digitalisation and just-in-time government payments.

Significance: Better government cash and payment management.

Foreign Exchange Reserves

Cause: Global geopolitical and financial uncertainty increases external-sector risks.

Development: RBI continued diversification while emphasising safety, liquidity, stability and data-driven risk management.

Effect: Greater resilience and more sophisticated reserve deployment.

Significance: Reserve management supports confidence and external financial stability.


Key Takeaways

  1. DGBA manages RBI’s role as banker to governments and banker to banks, besides internal accounts and accounting policies.
  2. Aadhaar-based CSS payments were rolled out to 26 States and 3 UTs during FY 2025-26.
  3. The Aadhaar DBT architecture uses NPCI’s APBS, while RBI effects gross fund settlement.
  4. All 28 States and 3 UTs were live in CSS by the end of FY 2025-26.
  5. Just-in-time CSS payments use the integration of e-Kuber, PFMS and State Government systems.
  6. Continuous clearing of government cheques reduced settlement from T+1 to same day.
  7. Continuous CTS Phase 1 became effective on October 4, 2025.
  8. Centralised Inward Clearing became effective on March 2, 2026, with Banking Department, Chennai serving as the service branch for all RBI Regional Offices.
  9. Government DBT payments through CBDC were enabled in e-Kuber under the Treasury Single Account framework.
  10. CBDC government payments can use Aadhaar as the unique identifier and may be released as programmable CBDC tokens.
  11. DEIO manages India’s foreign exchange reserves.
  12. India’s foreign exchange reserves increased by 3.4% during FY 2025-26.
  13. RBI’s reserve-management priorities were stability, safety and liquidity.
  14. RBI continued diversification across asset classes and jurisdictions.
  15. DEIO reviewed its credit-risk policy and introduced online dashboards providing real-time visibility into investment credit profiles.
  16. RBI held a focused discussion on Bilateral Swap Lines with ASEAN central banks on October 17, 2025.
  17. The “Resilient Reserves: Anchoring Stability in an Era of Uncertainty” conference was held on March 5–6, 2026.
  18. For 2026-27, reserve management will focus on diversification, risk optimisation, better disclosures and upgraded systems.

Final Exam Perspective

The easiest way to remember this chapter is to divide it into two RBI functions.

Function 1 — RBI as Banker to Government

DGBA

↓

e-Kuber

↓

NPCI / PFMS / State systems

↓

DBT / NEFT / RTGS / CBDC

↓

Efficient government payments

Function 2 — RBI as Manager of Foreign Exchange Reserves

DEIO

↓

Diversification

↓

Safety + Liquidity + Stability

↓

Credit-risk management

↓

Data-driven reserve deployment

The high-probability factual cluster is:

26 States + 3 UTs → Aadhaar DBT

28 States + 3 UTs → CSS live

e-Kuber + PFMS + State systems → just-in-time payments

October 4, 2025 → continuous CTS

T+1 → same-day government cheque settlement

March 2, 2026 → CIC

Chennai → CIC service branch

3.4% → FY26 foreign-exchange reserve growth

October 17, 2025 → ASEAN BSL discussion

March 5–6, 2026 → Resilient Reserves conference

For interviews, the deeper answer is even more important: RBI’s government-banking architecture is moving towards integrated, real-time and programmable digital payments, while reserve management is moving towards diversified, technology-enabled and risk-sensitive portfolio management.

Part 24 complete.

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