Jalan Panel likely to recommend Rs 50,000 crore transfer from contingency fund

The Bimal Jalan panel, which is looking into the size of capital reserve that the Reserve Bank of India should hold, 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. RBI is likely to suggest about a sub-lakh crore of transfers from the contingency reserves that can be done as per formulae arrived at by the ECF panel members and this amount is likely to be Rs 50,000 crore, according to IANS. 

1. 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.

2. 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. The government feels that through transfer to contingency reserves and other funds, the RBI has more than adequate capital.

3. The 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.

4. Currently, the RBI`s capital needs to 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," a top official said.

5. Another former RBI Board member said legally the RBI cannot part with its reserves. It can only part with a particular year`s profits with the government. Only the contingency reserves are being discussed for transfer to the government.