Union Finance Minister Arun Jaitley said that the Modi Government does not require funds from the Reserve Bank of India (RBI) for the next 6 months.
His words were: “I don’t need money in the next six months.”
On the criticism of the government for trying to undermine RBI’s authority, he said, “We respect the autonomy (of the RBI) but, at the same time, if some sectors are starved of liquidity or credit, we will flag those issues. We do so with the RBI.”
P. Chidambaram, the former finance minister and a top Congress leader poured scorn on the Modi government by tweeting: “Government is determined to ‘capture’ RBI in order to gain control over the reserves.”
The continuous push for access to RBI’s surplus reserves has prompted RBI’s board to form an expert panel to look into whether its cash pool is adequate.The board members advised RBI to aid small businesses and give bankers more time to step up capital norms to encourage lending and stimulate the economy ahead of the coming elections.
A committee for examining the Economic Capital Framework (ECF) will be formed and its composition will be jointly decided by Union finance minister Arun Jaitley and RBI governor Urjit Patel. The committee will also have outside members and experts, sources said.
The committee will look into the norms to decide on the RBI’s surplus amount and a formula for transferring the money to the banks and the appropriate level of reserves the central bank should hold.
Central government feels that the surplus can be transferred to it as the accumulated reserves are far too high and not in line with global practices.
Currently. RBI has reserves of Rs 9.69 lakh crore.