The government may not obtain windfall gain from the RBI's reserves as the Bimal Jalan Committee on Economic Capital Framework has proposed “nominal” transfer of surplus to the central government in a phased manner, according to a source in the know. The six-member committee, appointed by RBI, headed by former RBI governor Jalan was tasked with examining the central bank’s requirements on provisions, reserves and buffers. That would determine how much of the reserves could be transferred to the government.
“The report has proposed a formula for a nominal transfer of a portion of the RBI’s reserves to the central government in a period of three-five years. This is in line with the current practice being followed by the RBI for transferring dividend annually,” a person close to the development said. The final report will be presented before RBI Governor Shaktikanta Das in 15 days. However, it also suggest that the committee might not be unanimous on the issue and that Finance Secretary Subhash C Garg, one of the six committee members, has some divergent views on the matter. These objections will also be included in the final report.
The committee, which met on July 17 for the last time, has reportedly recommended transferring of funds from both contingency and revaluation reserves to the government. However, the panel has also sought a 'period review' of the RBI capital framework. Though there's no clarity on the committee's suggestion on the amount of money to be transferred to the government, Finance Minister Nirmala Sitharaman had budgeted to receive dividends worth over £16 billion from the central bank this year.
The central bank had total surplus cash reserves of £94.3 billion as on June 30, 2018. Right now, the central bank's assets development fund amounts to £2.28 billion and its foreign exchange forward contracts value at £326.2 million. The RBI's investment revaluation account is worth £ 1.33 billion. Apart from Jalan and Garg, other members of the panel include former deputy governor Rakesh Mohan (vice-chairman of the panel), RBI deputy governor NS Vishwanathan, and RBI central board members Bharat Doshi and Sudhir Mankad. The transfer of RBI's reserves to the government has been a contentious issue between the two sides for a long time.
