TIL Desk/Business/New Delhi/ The Reserve Bank of India (RBI) on Wednesday formed an expert committee on economic capital framework led by former RBI Governor Bimal Jalan to suggest the amount of reserves it needs to keep, handing over the balance to the government. The committee will file its report within 90 days from the date of its first meeting.
“As decided by the Central Board of RBI in its meeting held on November 19, 2018, the RBI, in consultation with the Government of India, has today (Wednesday) constituted an expert committee to review the extant Economic Capital Framework of the RBI,” the bank said.
The issue had become a bone of contention between the RBI and the government when the latter suggested that the central bank has been keeping reserves much larger than any other central bank and should transfer a significant amount to the government.
The six-member committee would “suggest an adequate level of risk provisioning that the RBI needs to maintain” and “determine whether the RBI is holding provisions, reserves and buffers in surplus/ deficit of the required level of such provisions, reserves and buffers”.
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