RBI board okays transfer of Rs 1.76 lakh cr to govt (Lead)
- By NewsOnFloor Staff
- Aug 26, 2019
- 95 views
Mumbai, Aug 26 (IANS) The Central Board of the Reserve Bank of India (RBI) on Monday accepted the Bimal Jalan panel recommendations and decided to transfer Rs 1.76 lakh crore in dividend and surplus reserves to the Government of India.
The Central Board has decided to transfer a sum of Rs 1,76,051 crore to the Government of India comprising of Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the board on Monday.
The Central Board has accepted all the recommendations of the Jalan panel and finalised the RBI's accounts for 2018-19 using the revised ECF to determine risk provisioning and surplus transfer.
The entire net income of Rs 1,23,414 crore for the year 2018-19, of which an amount of Rs 28,000 crore has already been paid as interim dividend, will be transferred to the Government of India. This is in addition to the Rs 52,637 crore of excess risk provisions which have been written back and will be consequently transferred to the government, an RBI statement said.
The panel recognised that RBI's provisioning for monetary, financial and external stability risks is the country's savings for a 'rainy day' (a monetary/financial stability crisis) which has been consciously maintained by the RBI in view of its role as the Monetary Authority and the Lender of Last Resort.
This risk provisioning made primarily from retained earnings is referred to as the contingent risk buffer (CRB) and has been recommended to be maintained within a range of 6.5 per cent to 5.5 per cent of the RBI's balance sheet.
The panel has recommended a surplus distribution policy wherein the Central Board will decide on the level of risk provisioning to be made to the extent necessary and only the residual net income (if any) will be transferred to the government.
The various types of RBI reserves are contingency fund, asset development fund, currency and gold revaluation account and investment revaluation account.
The contingency fund represents the provisions made for unforeseen contingencies while the currency and gold revaluation account represents unrealised market-to-market gains or losses.
The RBI maintains various types of reserves to cover various risk provisioning for market risk, operational risk, credit risk and contingency risk.
The RBI, in consultation with the Government of India, had constituted an expert committee to review the extent of ECF of the RBI under former central bank chairman Bimal Jalan.
Source : ians