New Delhi, July 2 (IANS) The panel set up to review the Reserve Bank of India’s economic capital framework estimated the transferable surplus, or the amount the central bank could potentially pass on to the government, at close to Rs 8,000 crore, financial news portal BloombergQuint reported on Tuesday.
The report quoted a person familiar with the matter telling BloombergQuint on condition of anonymity. This finding was part of the initial report of the committee, which is yet to be finalised due to differences between members.
In reaching that conclusion, the panel headed by former RBI Governor Bimal Jalan, considered three different formulae, said another person privy to the panel’s deliberations. After considering those scenarios, the panel settled on a formula which led to a small surplus of around Rs 8,000-8,500 crore, said the first person quoted above.
The panel will now meet on July 17, said the report.
Earlier the, panel chairman Bimal Jalan had told IANS that RBI’s Economic Framework Panel will meet after the middle of this month to finalise and submit the report to RBI
“The meeting is most probably in mid-July” Jalan had told IANS to a query if the panel is meeting this month for the final session. He however declined to throw light on the report.
“I cant 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 ex Central Bank Governor.
Sources, however, said the panel is likely to recommend modest amount of surplus transfer to the Centre. It is likely to suggest about sub- 1 lakh crores of transfers from the RBI kitty to Finance Ministry 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 FinMin over the next 2 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 RBI and Finance Ministry 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 meeting, FinMin members, which include Garg, cited Section 47 of the RBI Act. It 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 Cente 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% of gross assets maintained by the central bank is well above the global norm of around 14%. 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.