The Bimal Jalan panel might ask the Reserve Bank of India (RBI) to transfer Rs 50,000 crore to the Centre from its contingency fund. The panel, led by former RBI Governor Bimal Jalan, is looking into the size of capital reserves that the central bank should hold.
The RBI might suggest about sub-lakh crore of transfers from its contingency reserves, an IANS report said. This amount will be reached on the basis of a formula devised by the Jalan panel members and it is likely to be Rs 50,000 crore, the report said.
The RBI reportedly has around Rs 9.6 lakh crore in its various reserves, which include Contingency Fund, along with Asset Development Fund, Currency and Gold Revaluation Account and Investment revaluation Account Re-Securities. While the Centre is keen to get its hands on the entire contingency fund, which holds Rs 2.32 lakh crore, the Jalan panel is likely to advise otherwise considering currency fluctuations, the report said.
Transfer of funds from RBI to the Centre have been a bone of contention between the two for a long time. However, last year, the government had declared that there is no proposal to ask the RBI to transfer any funds to it.
The six-member Jalan panel was formed on December 26, 2018, to review the Economic Capital Framework (ECF) for the RBI. The committee was supposed to submit its report on April 8 but was later given a three-month extension. However, after a meeting last month, Jalan said the report was yet to be finalised so the committee would meet again.
As per reports, the panel members were trying to sort out the difference of opinions. A major difference of opinion was between the government's representative on the panel, Economic Secretary SC Garg, and other committee members over the transfer of "excess" capital reserves. While some of the members were of the opinion that cash reserves should be transferred in a phased manner, the government wanted to make it a 'one-time transfer'.
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 per cent, the Thorat committee said the reserve adequacy should be maintained at 18 per cent 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.
(Edited by Vivek Punj)