AGENCIES / NEW DELHI
The Reserve Bank of India (RBI) will transfer a surplus of Rs 1.76 lakh crore to the government as it has approved the recommendations of Bimal Jalan committee at the central board meet held in Mumbai on August 26.
The transfer sum comprises of Rs 1.23 lakh crore of surplus for the financial year 2018-19 and Rs 52,637 crore of excess provisions identified under the revised Economic Capital Framework (ECF) that was adopted at the central board meet.
“The Central Board accepted all the recommendations of the Committee and finalised the RBI’s accounts for 2018-19 using the revised framework to determine risk provisioning and surplus transfer,” the RBI said in a statement.
The Central Board decided to maintain the realised equity level at 5.5 per cent of the balance sheet as recommended by the committee, down from existing 6.8 per cent. The resultant excess risk provisions of Rs 52,637 crore were written back, RBI said.
The committee recommended maintaining the Contingent Risk Buffer within a range of 6.5 per cent to 5.5 per cent of the RBI’s balance sheet, comprising 5.5 to 4.5 per cent for monetary and financial stability risks and 1 per cent for credit and operational risks.
A six-member panel was constituted under former RBI Governor Bimal Jalan on December 26, 2018, to review the ECF for RBI and align it with global best practices. The RBI’s buffer of 28 percent of gross assets, as against the 14 percent followed by other central banks, was seen as unnecessary by the finance ministry, triggering a review.
With the revised framework, RBI’s economic capital as of June 30, 2019, stood at 23.3 percent.
“The committee’s recommendations were based on the consideration of the role of central banks’ financial resilience, cross-country practices, statutory provisions and the impact of the RBI’s public policy mandate and operating environment on its balance sheet and the risks involved,” RBI said.
As of June 30, 2019, the RBI stands as a central bank with one of the highest levels of financial resilience globally, the report said. The board also reviewed the current economic situation, global and domestic challenges and other areas of operations, the RBI said.
The meeting was chaired by RBI Governor Shaktikanta Das and attended by Deputy Governors NS Vishwanathan and Mahesh Kumar Jain. Prasanna Kumar Mohanty, Dilip Shanghvi, Natarajan Chandrasekaran, Bharat Doshi, Sudhir Mankad, Manish Sabharwal, Swaminathan Gurumurthy, Revathy Iyer and Sachin Chaturvedi also attended the meeting. Rajiv Kumar, Finance Secretary and Secretary, Department of Financial Services and Atanu Chakraborty, Secretary, Department of Economic Affairs, were also present.