RBI won’t trans­fer past re­serves for now

The Times of India (New Delhi edition) - - FRONT PAGE - NEWS NET­WORK

Mum­bai: The Re­serve Bank of In­dia (RBI) will not im­me­di­ately trans­fer sur­plus cap­i­tal, which is set aside as re­serves over the years, to the gov­ern­ment. The cen­tral bank au­dit com­mit­tee has, how­ever, cleared an in­terim div­i­dend of Rs 28,000 crore based on a lim­ited au­dit for the cur­rent year and the same is likely to be de­clared af­ter the cen­tral bank’s board meet­ing on Fe­bru­ary 18.

The de­mand to trans­fer cap­i­tal sur­plus was made by the Cen­tre af­ter its at­tempts to get the RBI to part with what was de­scribed “ex­cess re­serves” was turned down and the is­sue of cap­i­tal frame­work was re­ferred to a com­mit­tee un­der Bi­mal Jalan. The gov­ern­ment had ar­gued that the cen­tral bank had more re­serves than many of its peers.

The lat­est move by the depart­ment of eco­nomic af­fairs is part of a se­ries of de­mands on reg­u­la­tors, in­clud­ing Sebi, which mar­ket play­ers are see­ing as “over-reach” by the gov­ern­ment, es­pe­cially af­ter it pushed Ur­jit Pa­tel to re­sign as RBI gover­nor amid the threat of is­su­ing a di­rec­tive to the bank­ing reg­u­la­tor.

Fol­low­ing the in­terim Bud­get, eco­nomic af­fairs sec­re­tary Sub­hash Chan­dra Garg, who is seen to be driv­ing the of­fen­sive against the reg­u­la­tors, had said that the gov­ern­ment is ex­pect­ing a Rs 28,000 crore in­terim div­i­dend from RBI.

This was in ad­di­tion to the Rs 40,000 crore sur­plus al­ready paid out by the cen­tral bank last year. The Jalan com­mit­tee, which will de­cide on the ap­pro­pri­ate level of re­serves for RBI, is ex­pected to sub­mit its re­port by March 31. The con­cern in RBI is that the trans­fer of ear­lier year’s trans­fer to re­serves, without the Jalan com­mit­tee’s rec­om­men­da­tion, is in­ap­pro­pri­ate.

On Fe­bru­ary 5, in re­sponse to a Par­lia­men­tary ques­tion from Congress MP Selja Ku­mari, min­is­ter of state for fi­nance P Rad­hakr­ish­nan had said that the gov­ern­ment had re­quested RBI to pro­vide an in­terim sur­plus for the fi­nan­cial year 2018-19 “on the anal­ogy of pre­vi­ous fi­nan­cial year and trans­fer of the amount with­held from the sur­plus of 2016-17 and 2017-18”. He also said the gov­ern­ment had not made any re­quest un­der Sec­tion 7 of the RBI Act which em­pow­ers the gov­ern­ment to give di­rec­tions.

In the re­ply, the MoS said that RBI had held back Rs 13,190 crore and Rs 14,190 crore in 2016-17 and 2017-18 re­spec­tively which adds up to Rs 27,380 crore.

In his post-pol­icy in­ter­ac­tion on Fri­day, RBI gover­nor Shak­tikanta Das had said, “There are sev­eral is­sues which are un­der dis­cus­sion be­tween gov­ern­ment and RBI and a de­ci­sion is taken af­ter dis­cus­sion. Any de­ci­sion of RBI is driven by prin­ci­ples and ac­count­ing norms,” said Das. He was re­spond­ing to a ques­tion on whether gov­ern­ment had asked RBI to trans­fer funds from money set aside to­wards re­serves in the pre­vi­ous year.

Shak­tikanta Das, RBI guv

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