Jalan panel proposes change in RBI accounting year, transparent accounts

The panel’s report, which has been accepted by RBI Board, has noted that changes in the format of presentation of balance sheet would need necessary amendments to the RBI General Regulations.

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Bimal Jalan, former governor of Reserve Bank of India in New Delhi. (Express photo: Praveen Khanna)

The Bimal Jalan Committee on Economic Capital Framework of the RBI has proposed a more transparent presentation of the RBI’s annual accounts and change in its accounting year from July to June to April to March from the financial year 2020-21.

The panel’s report, which has been accepted by RBI Board, has noted that changes in the format of presentation of the balance sheet would need necessary amendments to the RBI General Regulations. “The information may, therefore, be presented as a Schedule to the balance sheet till such time the processes for completing a change in the style of balance sheet presentation are formalised,” it said. The committee has recommended that the RBI accounting year (July to June) may be brought in sync with fiscal year (April to March) from 2020-21. “The RBI would be able to provide better estimates of the projected surplus transfers to the government for the financial year for budgeting purposes,” the committee said.

“It could reduce the need for interim dividend being paid by the RBI. The payment of an interim dividend may then be restricted to extraordinary circumstances,” it said. It would obviate any timing considerations that may enter into the selection of open market operations or Market Stabilization Scheme as monetary policy tools. It would also bring about greater cohesiveness in monetary policy projections and reports published by RBI which mostly use the fiscal year as the base, the panel said.

“This is important in light of the very different estimates of RBI’s capital which has been mentioned in the public domain,” the panel said on the need for transparent accounts. In RBI’s balance sheet, while capital and reserve fund are explicitly shown, other sources of financial resilience are grouped under ‘Other Liabilities and Provisions’ and enumerated via Schedules making it difficult to arrive at total risk provisions, the panel said.