The Reserve Bank of India (RBI) and the Centre have set up a six-member expert panel to review the existing economic capital framework of the central bank of India.
The expert committee will be headed by former RBI Governor Bimal Jalan with former Deputy Governor Rakesh Mohan as his deputy.
The other members of the panel are Economic Affairs Secretary Subash Chandra Garg, RBI Deputy Governor N.S. Vishwanathan and two board members of the RBI — Bharat Doshi and Sudhir Mankad.
The committee would review the status, need and justification of various provisions under the economic capital framework of RBI. Also, it would analyze the reserves and buffers presently provided by the central bank. The analysis and review would be done keeping in mind the ‘public policy mandate of the RBI’ including the considerations of financial stability.
The panel will review and assess the best practices followed by the central banks of other countries to deal with the risks to which the balance sheets of the central banks are subjected. It would also suggest an adequate level of risk provisioning for RBI to determine whether its provisions, reserves, and buffers fall under the ‘surplus’ or ‘deficit’ level.
The Jalan-led committee will also propose a suitable profit distribution policy for RBI keeping in mind all the likely situation of the central bank– holding more provisions than required and holding less provisions than required.
RBI released a statement on Wednesday claiming that the panel will submit its report within 90 days from the date of its first meeting.
Dr. Bimal Jalan served as the Governor of the RBI between November 1997 and September 2003. He has held several administrative and advisory positions in the government including Chief Economic Adviser, Banking Secretary, and Finance Secretary.