Bimal Jalan Panel Likely to Make Recommendations for RBI

In a bid to look into the size of capital reserve that the Reserve Bank of India should hold, Bimal Jalan panel may recommend transfer of Rs 50,000 crore to the Centre from the contingency fund. The panel will submit its report this week to the RBI.

As per the 2017-18 RBI annual report, the various types of reserves are Contingency Fund Rs 2.32 lakh crore, Asset Development Fund Rs 22,811 crore, Currency and Gold Revaluation Account is Rs 6.91 lakh crore and Investment revaluation Account Re-Securities is 13,285 crore and this all totalled Rs 9.59 lakh crore.

While the Centre is keen on the entire contingency fund -- Rs 2.32 lakh crore, the Jalan panel is not inclined to transfer the entire fund reserve to the Government citing currency fluctuations are the order of the day so higher reserves.

While speculations were that the Centre is keen on one-third of the total reserves of the Rs 9.6 lakh crore, last year the government had said that there is no proposal to ask RBI to transfer Rs 3.6 (lakh crore) or Rs 1 lakh crore.

Despite government's denial, the matter stay as is. Officials said "Currently, the RBI's capital needs put its provisioning at 27 per cent, while most central banks have theirs at 14 per cent. Our calculations state that if the RBI provisions at 14 per cent, it can free up to Rs 3.6 lakh crore," an official said.

"The forex reserves and asset revaluation reserves for the domestic bonds are encumbered. The government cannot touch them," said a former banking secretary. Another ex-RBI Board member said legally, RBI cannot part with its reserves.