A high-level panel looking into appropriate capital reserves the RBI should maintain will hold at least two more meetings before finalising the report, former Reserve Bank governor Bimal Jalan, who is heading the committee, said.
The six-member Jalan panel was appointed on December 26, 2018, to review the Economic Capital Framework for the RBI. The committee was supposed to submit its report in 90 days from the first day of its meeting, which held on January 8.
"At the moment, it is in the process ... We will have at least two more meetings," he said when asked whether the committee has finalised its report.
The other key members of the committee include Rakesh Mohan, former deputy governor of RBI as vice-chairman, finance secretary Subhash Chandra Garg, RBI deputy governor NS Vishwanathan, and two RBI central board members, Bharat Doshi and Sudhir Mankad.
The panel has been entrusted with the task of reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks, which a central bank balance sheets are subject to.
The panel will propose a suitable profit distribution policy, taking into account all the likely situations of the RBI, including the situation of holding more provisions than required.
The government and the RBI under previous governor Urjit Patel had been at loggerheads over the Rs 9.6 lakh crore surplus capital with the central bank.
The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by the RBI is well above the global norm of around 14 per cent. Following this, the RBI board in its meeting on November 19, 2018, decided to constitute a panel to examine Economic Capital Framework.
In the past, the issue of the ideal size of reserves of the Reserve Bank of India was examined by three committees -- V Subrahmanyam in 1997, Usha Thorat in 2004 and YH Malegam as late as in 2013.
While the Subrahmanyam panel recommended for building a 12 per cent contingency reserve, the Thorat panel suggested it should be maintained at a higher 18 per cent of the total assets of the central bank.
The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam committee.
The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually but did not ascribe any particular number.
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