The major point of contention between the Reserve Bank of India and the government is the proposal of surplus transfer of Rs 3.6 lakh crore to the government as the Ministry of Finance is of the view that the surplus can be managed jointly by the government and the RBI. This is more than a third of the total reserves of the central bank. However, the RBI has not accepted the proposal, saying the move can adversely impact the macroeconomic stability and a central bank with low capital level may lose its credibility, The Indian Express reported citing sources. For the financial year ended on June 2018, the RBI had total reserves of Rs 9.59 lakh crore, which comprised mainly currency and gold revaluation account (Rs 6.91 lakh crore) and contingency fund (Rs 2.32 lakh crore). At present, the RBI does its risk analysis and sets out a part of its surplus profits to be transferred to the government. Sources told the paper that another area where the two differ is the government's proposal that the central bank should transfer the entire surplus from the financial year\u00a02017-18\u00a0to the government, after taking into account its capital requirement. RBI believes that tapping the reserves of the central bank will create no new government revenue. READ MORE: Why central bank transfers surplus profit and here\u2019s how it works It may be noted that in the financial year 2017-18, the RBI had made a surplus transfer of Rs 50,000 crore to the government (which comprised an interim transfer of Rs 10,000 crore). It was quite higher from Rs 30,659 crore in the previous financial year 2016-17, but lower than in the previous three years. The government argues that existing economic capital framework that governs the central bank's capital requirements and terms for the transfer of its reserves to the government is a very \u201cconservative\u201d assessment of risk by the RBI. The current economic capital framework was adopted by the central bank in July 2017. The finance ministry said that it was \u201cunilaterally\u201d adopted by the banking regulator and the government nominees on the board were not present in the meeting. Therefore, the government has been seeking to discuss this with the central bank since then as it did not accede to this framework. One of the other objections raised by the government is one of the RBI's staggered surplus distribution policy (SSDP), under which the surplus is transferred to the government. The government believes that the central bank been \u201cconservative\u201d and at times \u201carbitrary,\u201d particularly when it came to the transfer of the interim surplus, the newspaper said. Now, the government also thinks that the central bank has over-estimated its capital reserves requirements, which has led to an excess capital of Rs 3.6 lakh crore, and it can be used for several purposes, including recapitalisation of public sector banks, help them augment their loan book and come out of the Prompt Corrective Action framework, among others. Sources said the ministry proposed that from 2017-18, the RBI should transfer the entire surplus to the government after taking into account its capital requirement. This is another area where the government and the RBI differ. According to the government, the central bank of India holds much higher total capital as a percentage of its total assets (at about 28%), as compared with global central banks.