The Reserve Bank of India (RBI) on Wednesday set up an expert committee, headed by its former governor Bimal Jalan, to suggest how the central bank should handle its reserves and whether it can transfer its surplus to the government.
The committee, which has been formed to review the existing economic capital framework (ECF), will have former RBI deputy governor Rakesh Mohan as its vice chairman. Other members are RBI central board directors Bharat Doshi and Sudhir Mankad; deputy governor N.S. Vishwanathan; and economic affairs secretary Subhash Chandra Garg. The panel will submit its report within 90 days of its first meeting.
The government has been insisting that the central bank hand over its surplus reserves amid a shortfall in revenue collections. Access to the funds will allow finance minister Arun Jaitley to meet deficit targets, infuse capital into weak banks to boost lending and fund welfare programmes. The Jalan panel will decide whether RBI is holding provisions, reserves and buffers in surplus of the required levels.
“[It would] propose a suitable profits distribution policy taking into account all the likely situations of the RBI, including the situations of holding more provisions than required and the RBI holding less provisions than required,” the central bank said in a statement on Wednesday.