The Bimal Jalan Panel that was constituted to transfer RBI’s excess reserves to the government is known to favour transfer in tranches. The Committee that was formed after the controversy related to the transfer of RBI’s reserves to the government is expected to make its final report soon.
Bureaucratic member of the Panel, Mr Suresh Chandra Garg insisted for one-time transfer. At present, the RBI is transferring its income to the government in two tranches per year.
Mr Garg is also the Finance Secretary and one of the two government representatives in the RBI’s board of executives and hence is expected to represent government voice.
In the current financial year, the RBI is estimated to transfer Rs 0.9 lakh crores dividend to the government out of the Rs 27.8 lakh crore budget. This is one of the historically high contribution from the RBI to run the budget.
The government is trying to get more out of the RBI reserves with the government officials and nominees related with RBI functions are pitching for more resource transfer from the RBI.
They argue that the RBI is one of the highly capitalised central banks in the world. Officials and the government appointed non-officials in the RBI boards argue for keeping just 14% of capital reserves down from 27% at present.
But the RBI officials resist the move in the context that such a mammoth transfer will weaken the RBI’s ability to meet contingencies including meeting some emergency liquidity crisis.