RBI constitutes committee on Economic Capital Framework, appoints former governor Bimal Jalan as chairman
Former deputy governor Rakesh Mohan has been appointed as vice chairman of the committee, the RBI said
The Reserve Bank of India (RBI) has constituted the Expert Committee on Economic Capital Framework with former governor Bimal Jalan as its chairman.
Former deputy governor Rakesh Mohan has been appointed as vice chairman of the committee, the RBI said in a statement on Wednesday. Members of the committee include Bharat Doshi, director, RBI board; Sudhir Mankad, director, RBI board; Subhash Chandra Garg, Economic Affairs Secretary; NS Vishwanathan, RBI deputy governor.
The committee will submit its report within a period of 90 days from the date of its first meeting, it said. The committee will determine the appropriate levels of reserves the central bank ought to hold.
In its meeting held in November, the RBI's board had decided to constitute a committee of experts to examine the Economic Capital Framework (ECF).
As of 30 June, 2018, RBI's reserves stood at Rs 9.43 lakh crore, with a major portion of the reserves coming from contingency fund (Rs 2.32 lakh crore) and currency and gold revaluation account (CGRA) (Rs 6.91 lakh crore).
While the contingency fund stood at 6.41 percent of the total assets of the RBI, the CGRA was 19.10 percent in the year ended 30 June, 2018. In the past, the issue of the ideal size of RBI's reserves was examined by three committees -- V Subrahmanyam (1997), Usha Thorat (2004) and Y H Malegam (2013).
While the Subrahmanyam committee recommended that contingency reserve should be built up to 12 percent, the Thorat committee had said the reserve adequacy should be maintained at 18 percent of the total assets.
The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam panel.
The Malegam committee recommended that adequate amount of profits should continue to be transferred each year to contingency reserves.
The issue of transfer of RBI's reserves to the government has been a contentious issue between the two sides for a long time.
Recently, RBI Independent Director and Swadeshi ideologue S Gurumurthy had made a case for calibration of RBI's massive reserves and said no central bank in the world maintains such high levels of surplus.
With inputs from PTI
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