RBI forms expert panel on reserves, Bimal Jalan to be the head

Bharat Doshi and Sudhir Mankad, who are members of the central board of the RBI, will be other two members of the expert committee on Economic Capital Framework.

The Reserve Bank of India on Wednesday constituted a six-member committee headed by former Governor Bimal Jalan. (File)

The Reserve Bank of India on Wednesday constituted a six-member committee headed by former Governor Bimal Jalan with former secretary Rakesh Mohan as the vice-chair to decide on its appropriate size of reserves. The decision was taken more than a month after the idea to form an expert committee was first mooted.

The panel will include Economic Affairs Secretary Subhash Chandra Garg and RBI Deputy Governor NS Vishwanathan, the RBI said in a statement. Bharat Doshi and Sudhir Mankad, who are members of the central board of the RBI, will be other two members of the expert committee on Economic Capital Framework.

The board of RBI in its meeting on November 19 had decided to constitute the panel but the committee could not be announced as the two sides reportedly differed on the role of Mohan. Urjit Patel, who resigned as RBI Governor recently, was said to have hotly contested the appointment of Mohan.

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The reserve bank had been at loggerheads with the central government over the issue of capital reserve.

The RBI has a massive Rs 9.59 lakh crore reserves and the government, if reports are to be believed, wants the central bank to part with a third of that fund — an issue which along with easing of norms for weak banks and raising liquidity has brought the two at loggerheads in recent weeks.

The government, however, denied seeking a massive capital transfer from the Reserve Bank.

The Expert Committee would “review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI,” an RBI statement said.

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It will also “review global best practices followed by the central banks in making assessment and provisions for risks which central bank balance sheets are subject to.” The panel will propose a suitable profits distribution policy taking into account all the likely situations of the RBI, including the situations of holding more provisions than required.

(With PTI inputs)

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