Mumbai: The Bimal Jalan committee on the appropriate capital reserves for the Reserve Bank is likely to identify an excess buffer of up to Rs 3 lakh crore, according to a foreign brokerage.
This includes the excess capital in contingency reserves and also revaluation reserves, a report by Bank of America Merrill Lynch said Monday, amid reports that the panel is almost ready with its report. As of September last, the excess capital with the central bank stood at Rs 9.6 lakh crore. “Our stress tests estimate RBI’s excess capital at Rs 1-3 lakh crore,” the report said.
Halving of the contingency reserves to a level of 3.25 percent from the present 6.5 percent will release Rs 1.282 lakh crore, the report said, pointing out that the level is still 50 percent higher than what central banks in the BRICS grouping have. Similarly, halving the yield cover hike to 4.5 percent from the present 9 percent will release another Rs 1.170 lakh crore, it said.
Capping the overall reserves at 20 percent level from the present 25.5 percent will release Rs 1.96 lakh crore, it said, adding the level is higher than the 2004 Usha Thorat committee recommendation of 18 percent and 16 percent that the Economic Survey 2018 had pegged. The report further noted that there is no restriction which prevents the RBI from transferring the money to the government.
The six-member panel headed by former RBI governor Jalan was set up following a widespread debate triggered by a government move last year to get a part of the RBI reserves transferred ahead of the elections.
transferred ahead of the elections.
