Govt wants ‘ap­pro­pri­ate’ cap­i­tal pol­icy for RBI

The New Indian Express - - FRONT PAGE -

AS­SERT­ING that its fis­cal math is on track, the gov­ern­ment on Fri­day de­nied re­ports that it had sought cap­i­tal trans­fer of `3.6 lakh crore from the Re­serve Bank of In­dia. It, though, con­ceded that it was in talks with RBI to fix the size of the cap­i­tal re­serves the cen­tral bank can keep.

“Lot of mis­in­formed spec­u­la­tion is go­ing around in me­dia. Gov­ern­ment’s fis­cal math is com­pletely on track. There is no pro­posal to ask RBI to trans­fer `3.6 or `1 lakh crore, as spec­u­lated,” Eco­nomic Af­fairs Sec­re­tary S C Garg tweeted.

He added that the only pro­posal un­der dis­cus­sion was on fix­ing an “ap­pro­pri­ate eco­nomic cap­i­tal frame­work” for RBI.

The tweet came in the back­drop of grow­ing dis­sent be­tween the RBI and the gov­ern­ment over Prompt Cor­rec­tive Ac­tion, RBI’s au­ton­omy, and the cen­tral bank’s re­luc­tance to share sur­plus funds with the gov­ern­ment.

While the RBI is hold­ing on its re­serves, the fi­nance min­istry wants it to be gen­er­ous with the div­i­dend it shares with the gov­ern­ment.

The is­sue was al­ready high­lighted by for­mer chief eco­nomic ad­viser Arvind Subra­ma­nian , who in the Eco­nomic Sur­vey for 2016-17 had said that the RBI was highly cap­i­talised and nearly `4 lakh crore of its cap­i­tal trans­fer to the gov­ern­ment could be used for re­cap­i­tal­is­ing the banks.

There were also many rounds of talks be­tween the fi­nance min­istry and RBI. How­ever, no agree­ment was reached.

SC Garg

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