Mumbai : The Central Board of the Reserve Bank of India (RBI) on Monday accepted the Bimal Jalan Committee report and has decided to transfer a sum of Rs.1,76,051 crore to the Government of India. The sum comprises of Rs.1,23,414 crore of surplus for the year 2018-19 and Rs.52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board today.
RBI, in consultation with the Government of India, had constituted an Expert Committee under the Chairmanship of Dr. Bimal Jalan to Review the Extant Economic Capital Framework of the Central Bank. The Committee has submitted its report to the Governor of the RBI. The Committee’s recommendations were based on the consideration of the role of central banks’ financial resilience, cross-country practices, statutory provisions and the impact of the RBI’s public policy mandate and operating environment on its balance sheet and the risks involved.
“ The Committee has recommended a surplus distribution policy which targets the level of realized equity to be maintained by the RBI, within the overall level of its economic capital vis-à-vis the earlier policy which targeted total economic capital level alone. Only if realized equity is above its requirement, will the entire net income be transferable to the Government. If it is below the lower bound of requirement, risk provisioning will be made to the extent necessary and only the residual net income (if any) transferred to the Government. Within the range of CRB, i.e., 6.5 to 5.5 percent of the balance sheet, the Central Board will decide on the level of risk provisioning” RBI said.