NEW DELHI: The report by the expert committee on economic capital framework (ECF) that is expected to spell out details regarding how the Reserve Bank of India (RBI) should handle its reserves and whether it can transfer its surplus to the government will now be submitted during May-June, missing its April deadline. The report is also expected to detail the amount the central bank should transfer to the government.
“The report will be finalized in May-June," Former RBI Governor and head of the panel Bimal Jalan said after the meeting on ECF in New Delhi on Tuesday.
The meeting was also attended by finance secretary Subhash Chandra Garg.
The committee on ECF was set by the central bank in December, 2018 and was expected to submit its report within 90 days from the date of its first meeting. Besides, Jalan and Garg, former RBI Deputy Governer Rakesh Mohan, Directors of RBI’s central board Bharat Doshi and Sudhir Makand, and RBI Deputy Governor NS Vishwanathan are also part of the panel.
The panel was constituted at a time when the government and the central bank were at loggerheads on the issue RBI’s surplus transfer to the government.
“The expert committee would review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI; and review global best practices followed by the central banks in making assessment and provisions for risks which central bank balance sheets are subject to," according to the terms of reference of the committee.
The panel should recommend an adequate level of risk provisioning that RBI needs to maintain and also suggest what would be the treatment of surplus reserves created out of realized gains.