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For weeks, the government and the central bank are sparring over ceding surplus reserves to the government. Photo: Abhijit Bhatlekar/Mint
For weeks, the government and the central bank are sparring over ceding surplus reserves to the government. Photo: Abhijit Bhatlekar/Mint

RBI to set up expert panel to examine economic capital framework

The move that could prompt a rethink of what constitutes adequate capital reserves for the Reserve Bank of India (RBI)

New Delhi: The Reserve Bank of India (RBI) said on Monday it has decided to set up an expert panel to examine the economic capital framework of the central bank, in a move that could prompt a rethink of what constitutes adequate capital reserves for the central bank.

For weeks, government officials have been pressuring RBI to accede to a range of demands, from easing lending curbs to handing over surplus reserves to the government.

The government and the central bank will jointly decide on the members of the panel and the scope of the panel, RBI said in a statement late on Monday.

ALSO READ | Decisions taken at the RBI board meeting

In addition, RBI said its financial supervision board will examine the issue around easing of the prompt corrective action plan for some banks—another key of contention between the government and the central bank.

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