RBI’s ECF panel to meet later this month: Jalan

Bimal Jalan-wefornews-min

New Delhi, July 1 RBI’s Economic Framework Panel will meet sometime in mid July to finalise and submit its report to the central bank, panel chairman Bimal Jalan said.

“The meeting is most probably in mid July,” Jalan told IANS. He however declined to throw light on the report.

“I can’t comment on the contents of the report. The report is going to be submitted to the RBI and it will decide what to do with the report,” said the forner Reserve Bank of India Governor.

Sources, however, said the panel was likely to recommend modest amount of surplus transfer to the Centre. It is likely to suggest less than one lakh crore of transfers from the RBI’s kitty to Finance Minister with the usage limited not to control fiscal deficit or spend on social sector schemes but to retire debt.

The current excess capital is pegged at Rs 9.6 lakh crore.

If the government decides to adopt the report, the amount is likely to be transferred to the Finance Minister over the next two years in tranches.

The Budget on July 5 will not mention the transfer of RBI’s surplus amount as on non-tax revenues since the amount and the final report is yet to be out.

The report will not be made public till a certain time till the RBI and Finance Minister decide to do so, said sources.

Economic Affairs Secretary Subhash Chandra Garg has expressed dissent on the current view of the panel on low and stretched transfer.

During the past two meetings, the Ministry members which include Garg has cited Section 47 of the RBI Act in this regard, which says that “after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and for all other matters for which provision is to be made by or under this Act or which are usually provided for by bankers, the balance of the profits shall be paid to the central government.”

The Centre expects this amount should be at least one-third at Rs 3.6 lakh crore as the RBI has over Rs 9.6 lakh crore surplus capital with it. The Finance Ministry believes that the buffer of 28 per cent of gross assets maintained by the central bank is well above the global norm of around 14 per cent.

In the past, the issue of the ideal level of RBI’s reserves had been examined by three committees — one headed by V. Subrahmanyam in 1997, by Usha Thorat in 2004 and by Y.H. Malegam in 2013.

A Finance Ministry official said let the report come out in finality, till then it is all in the realm of discussion. Once the RBI takes a look at it and Finance Minister being the principal shareholder of the RBI is given the report for further action on implementation, it will be seen what to do.

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