Jalan panel holds 1st meeting to examine reserve size of RBI

A high-level panel led by former RBI governor Bimal Jalan on Tuesday held its first meeting to decide on an appropriate size of reserves that the central bank should maintain and the dividend it should give to the government.

The six-member panel is likely to submit its report in April, sources said.

The panel has been entrusted with the task of reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks which a central bank balance sheets are subject to.

The panel having former economic affairs secretary Rakesh Mohan as its vice chairman will propose a suitable profit distribution policy taking into account all the likely situations of RBI, including the situation of holding more provisions than required.

The government and RBI under previous governor Urjit Patel had been at loggerheads over the Rs 9.6 lakh crore surplus capital with the central bank.

The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by RBI is well above the global norm of around 14 per cent.

Following this, the RBI board in its meeting on November 19, 2018 decided to constitute a panel to examine Economic Capital Framework.