RBI (Reserve Bank of India) accepted the recommendations of Bimal Jalan Committee on Tuesday and agreed to transfer its 1.76 lakh crores surplus to the government. It is said that all the recommendations of the panel have been accepted.
Major Recommendations of Bimal Jalan Committee-
- It directed the central bank to pay its interim dividend to the government.
- RBI’s capital framework to be reviewed every five years at regular intervals.
- The accounting year of the central bank (July-June) should be aligned with the fiscal year that ends on 31 March. This will help the central bank in providing better estimates of the surplus in the upcoming financial year. It will also eliminate the necessity of interim dividends.
- It also recommended an extensive surplus distribution policy. It calls for maintaining realized equity within the overall level of its economic capital. This economic capital has been defined as a combination of revaluation reserves and realized equity.
- The committee recommended RBI to maintain its Contingency Risk Buffer (CRB) within the band of 6.5-5.5% of the balance sheet.
- It recommended a more transparent representation of RBI’s accounts annually.
- The committee also called for ensuring harmony and cohesiveness between the objectives of RBI and government.
Bimal Jalan Committee was set up to review the central bank’s Economic Capital Framework. Other members of the committee include- former deputy governor of RBI – Rakesh Mohan as vice-chairman, Finance secretary – Subhash Chandra Garg, RBI deputy governor N S Vishwanathan and RBI’s central board members- Bharat Doshi and Sudhir Mankad.
The most significant measure taken by the central bank is to transfer 1.76 lakh crore. The amount is double of the previous record of Rs 65,896 crores of last year’s transfer. It is expected to help the government in tackling the economic slowdown without worrying about increasing its “fiscal deficit”.
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