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Capital framework review of RBI
Why is it in the news ?
- The Bimal Jalan panel of the Reserve Bank has recommended that the revised economic capital framework(ECF) be reviewed every five years.
- Under the ECF, the RBI decided to transfer Rs 52,637 crore excess provisions to the government.
More in the news
- The RBI's central board on Monday approved the transfer of record Rs 1.76 lakh crore dividend and surplus reserves to the government.
- This comprises 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 ECF.
- Committee Recommendations:(1) The RBI accounting year (July-June) may be brought in sync with the fiscal year (April to March) from the financial year 2020-21.(2) This could reduce the need for interim dividend being paid by the RBI.(3) The framework may be periodically reviewed every five years.(4) If there is a significant change in the RBI's risks and operating environment, an intermediate review may be considered.(5) There should be a surplus distribution policy which targets not only the total economic capital, but also the realised equity level of the RBI's capital.(6) The committee has recommended adopting the Expected Shortfall (ES) methodology (in place of the extant Stressed-Value at Risk) for measuring market risk.
Source
The Hindu.