Stage set for another showdown between RBI and government
economist and columnist Indira Rajaraman, “seems to indicate that the government is looking to allay market fears. It seems the government wants to convey that it does not plan to wipe out RBI’S capital but is only looking for a reasonable share—any excess surplus that can be transferred.”
“In principle, the RBI should have on hand some internally worked out calculations of the optimal level of the three kinds of reserves in the RBI balance sheet,” she said.
These are valuation reserves for dealing with volatility in foreign exchange holdings and government securities, asset development reserves for taking care of depreciation and other asset-related costs, and a contingency reserve to take care of any unforeseen emergencies. As of June 2018, the total amount in these three types of reserves exceeded ₹9 trillion with more than ₹6.9 trillion in valuation reserves, RBI’S annual accounts show.