Jalan panel’s report on surplus transfer to be considered by RBI Board on Monday

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Published: August 24, 2019 7:32:27 PM

The six-member committee was formed under former RBI Governor Bimal Jalan on December 26, 2018, to review the economic capital framework (ECF) for the central bank.

Bimal Jalan, Former RBI Governor, GDP, GDP level, capital reserves, overseas marketThe report was submitted by the panel on Friday.

The Bimal Jalan committee, set up in December last year to assess the adequate size of capital to be held by the Reserve Bank of India, has submitted its report that will be considered by the board of the central bank on Monday, ET Now reported on Saturday. The panel, which submitted its report on Friday, has favoured transferring of the RBI reserves in tranches to the government while the transfer of surplus by the bank should be used to retire public debt and recapitalise public sector banks. However, it is not clear about the amount of reserves to be transferred.

The six-member committee was formed under former RBI Governor Bimal Jalan on December 26, 2018, to review the economic capital framework (ECF) for the central bank. The decision came after the ministry of finance sought global best practices to be followed by the RBI along with giving more surplus to the government. RBI has more than Rs 9 lakh crore of surplus as per multiple estimates, PTI reported.

The government would be able to meet the fiscal deficit target of 3.3 per cent of the GDP for the current fiscal, with the surplus money since it would be a windfall gain to the exchequer. The fiscal deficit target was pegged 3.4 per cent in the FY20 budget. Also, Rs 90,000 crore dividend from the RBI is expected by the government in the financial year vis-a-vis Rs 68,000 crore received in the last fiscal year. 

The committee includes vice-chairman Rakesh Mohan, former deputy governor of the RBI; Finance Secretary Rajiv Kumar; N S Vishwanathan, Deputy Governor, RBI; and the central bank’s board members — Bharat Doshi and Sudhir Mankad.

According to the finance ministry, during former RBI governor Urjit Patel’s tenure, the buffer of 28 per cent of gross assets maintained by the RBI is beyond the global best practice of around 14 per cent. The RBI board had then (on November 19, 2018) decided to set-up a panel to examine the economic capital framework.

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