Reportedly the Reserve Bank of india (RBI) on Monday approved the transfer of record Rs 1.76 lakh crore dividend and surplus reserves to the government, boosting Prime Minister Narendra modi led regime's prospect to stimulate the slowing economy without widening fiscal deficit. Meanwhile Governor Shaktikanta Das led RBI central board gave its nod for transferring to the government a sum of Rs 1,76,051 crore comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF).
Furthermore the excess reserve transfer is in line with the recommendation of former RBI governor Bimal Jalan led panel constituted to decide size of capital reserves that the central bank should hold. Further the government was represented by Finance Secretary Rajiv Kumar in the panel which finalized its report on August 14 by consensus.
Moreover the modi government and the RBI under its previous governor Urjit Patel had been at loggerheads over the optimum level of surplus capital with the central bank. Perhaps as a result, the RBI in its crucial November 2018 board meeting decided to form a committee to review the economic capital framework (ECF) for the Reserve Bank.
