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Jalan panel defers report on RBI’s surplus funds due to lack of consensus

The panel has been tasked with reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks
New Delhi: A Reserve Bank of India (RBI) committee set up to review Central bank’s guidelines for transfer of its surplus funds to the government has deferred the submission of its report on Wednesday due to lack of consensus, an official said. The six-member committee led by former RBI Governor Bimal Jalan will now meet once more before submitting its report by the month-end. “There may be differences of opinion, but that is being discussed,” the official said.

Why was the committee formed?

The committee had been formed by the government in December 2018 to review the Economic Capital Framework (ECF) for RBI after the Finance Ministry had asked the Central bank to transfer funds to the government. The ministry was of the opinion that the buffer of 28 percent of gross assets maintained by the Central bank is well above the global norm of around 14 percent. The matter had been a constant battleground between the previous RBI Governor Urjit Patel and the Centre. The bank has over Rs 9.6 lakh crore surplus capital. The panel has been tasked with reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks.

Who all are on the panel?

Apart from Jalan, other key members on the panel include Rakesh Mohan, former deputy governor of RBI as the vice-chairman, finance secretary Subhash Chandra Garg, RBI deputy governor NS Vishwanathan, and two RBI central board members — Bharat Doshi and Sudhir Mankad. The committee was supposed to submit its report within 90 days of its first meeting which took place on January 8. Following the expiry of the deadline, the panel was given a three-month extension.