Jalan Panel submits report, RBI board likely to vet it on Monday

The Jalan Panel has submitted its report and the board of the Reserve Bank of India will consider the same on Monday, ETNOW reported.

The Jalan Committee was constituted to suggest appropriate reserves that RBI should maintain and dividends it should pay to the government.

ETNOW reported that the panel has favoured transferring of RBI reserves, but in tranches. The report was submitted on Friday, it said.

Any transfer of surplus by RBI should help the government retire public debt and recapitalise PSU banks and position them well to drive the credit cycle.

Already, Finance Minister Nirmala Sitharaman has announced Rs 70,000 crore in PSU capitalisation. It is seen enabling release of Rs 5 lakh crore liquidity into the market.

While there is no clarity as to how much of RBI’s excess reserve could be transferred to the government, analysts said the contingency fund, currency and gold revaluation account add up to Rs 9.2 lakh crore, which is 25 per cent of RBI's total balance sheet size.

If this is brought down by 25 per cent to the global norm of 14 per cent, it would release capital up to Rs 5 lakh crore (2.4 per cent of GDP). But the actual number could be lower, analysts said.

The committee on Economic Capital Framework was set up by the apex bank in December, 2018. It was expected to submit its report within 90 days. But it got delayed for various reasons.