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:
- State Governments send Aadhaar-based payment files directly to NPCI.
- NPCI processes the files.
- 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:
- Migration to online reporting of government payments and amendments.
- Migration of IGAA to the enhanced e-payment system in e-Kuber.
- 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.
| Area | Department | Main Function |
|---|---|---|
| Government banking | DGBA | Banker to governments and government accounts |
| Foreign exchange reserves | DEIO | Management of foreign exchange reserves |
| Core RBI banking platform | e-Kuber | Government and other RBI banking operations |
| Government DBT | e-Kuber + NPCI/PFMS/State systems | Digital government payments |
| Reserve risk management | DEIO | Credit-risk, diversification and portfolio management |
29. Most Important Numbers and Dates
| Topic | Figure / Date |
|---|---|
| Foreign exchange reserves growth in FY 2025-26 | 3.4% |
| States + UTs live in CSS | 28 States + 3 UTs |
| Aadhaar DBT rollout | 26 States + 3 UTs |
| Online GST MoE | 26 States + 3 UTs |
| Dashboard onboarding | 9 States + 2 UTs |
| IFSC synchronisation | 12 States |
| Agency commission revision | April 1, 2025 |
| Agency commission review cycle | Every 3 years |
| Continuous CTS | October 4, 2025 |
| Government-cheque settlement | T+1 → same day |
| Centralised Inward Clearing | March 2, 2026 |
| CIC service branch | Banking Department, Chennai |
| BSL discussion | October 17, 2025 |
| Resilient Reserves Conference | March 5–6, 2026 |
| All States/3 UTs live in CSS | 28 + 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
- DGBA manages RBI’s role as banker to governments and banker to banks, besides internal accounts and accounting policies.
- Aadhaar-based CSS payments were rolled out to 26 States and 3 UTs during FY 2025-26.
- The Aadhaar DBT architecture uses NPCI’s APBS, while RBI effects gross fund settlement.
- All 28 States and 3 UTs were live in CSS by the end of FY 2025-26.
- Just-in-time CSS payments use the integration of e-Kuber, PFMS and State Government systems.
- Continuous clearing of government cheques reduced settlement from T+1 to same day.
- Continuous CTS Phase 1 became effective on October 4, 2025.
- Centralised Inward Clearing became effective on March 2, 2026, with Banking Department, Chennai serving as the service branch for all RBI Regional Offices.
- Government DBT payments through CBDC were enabled in e-Kuber under the Treasury Single Account framework.
- CBDC government payments can use Aadhaar as the unique identifier and may be released as programmable CBDC tokens.
- DEIO manages India’s foreign exchange reserves.
- India’s foreign exchange reserves increased by 3.4% during FY 2025-26.
- RBI’s reserve-management priorities were stability, safety and liquidity.
- RBI continued diversification across asset classes and jurisdictions.
- DEIO reviewed its credit-risk policy and introduced online dashboards providing real-time visibility into investment credit profiles.
- RBI held a focused discussion on Bilateral Swap Lines with ASEAN central banks on October 17, 2025.
- The “Resilient Reserves: Anchoring Stability in an Era of Uncertainty” conference was held on March 5–6, 2026.
- 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.