Jalan committee finalises report on RBI reserves; board meet on Aug 23

File photo of Bimal Jalan, former RBI governor
The Reserve Bank of India’s (RBI’s) central board meeting scheduled to be held on August 23 will likely take up the report of the Bimal Jalan committee, tasked with reviewing the central bank’s economic capital framework.

The six-member expert committee held its last meeting on Wednesday, according to sources, to finalise a “fresh report”, which will be submitted to RBI Governor Shaktikanta Das before the central board meeting later this month, said a committee member, who didn’t wish to be identified.

The Jalan committee report will not have the views of former finance and economic affairs secretary Subhash Chandra Garg, who had proposed to submit a dissent note, according to the source.

“The committee has recommended a transfer of surplus from the RBI to the government in a phased manner in accordance with the existing practice. The committee held its final meeting today and will submit the report to the RBI before its board meeting,” the official said. The panel has recommended a periodic review of the RBI’s economic capital framework. 

Last month, the government had shifted Garg to the power ministry, following which he was replaced by finance secretary Rajiv Kumar in the committee. Garg was in favour of a one-time transfer of 'surplus reserves' from the RBI to the government, which hadn't found favour among other committee members, including its chairman Jalan and vice-chairman Rakesh Mohan.

Following Garg's exit, the committee prepared a "fresh report", the source said, and all members were "more or less" unanimous on the panel's recommendations, ending a stalemate that had developed over the past few months. This means that the Union government may not get a windfall gain it was expecting from the RBI reserves if the committee's recommendations are accepted by the RBI central board.

The RBI is expected to take a call on the dividend transfer to the central government in its board meeting. The meeting will approve the audited finances of the central bank for the July-June period, which is the RBI's financial year.

Earlier in February, the central bank had transferred Rs 28,000 crore as interim dividend to the government, in addition to Rs 40,000 crore dividend paid in 2018-19. In 2017-18, the government had received Rs 40,659 from the RBI as dividend.   

Initially, the finance ministry, then led by Garg, had expected a transfer of around Rs 3 trillion from the RBI's reserve funds, which was at the heart of a conflict between the regulator and the government last year.

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