New Economic Capital Framework

RBI on 26th August approved the transfer of Rs 1.76 lakh crore dividend and surplus reserves to the government. This amount will help government in stimulating the slowing economy without widening fiscal deficit. The excess reserve transfer is in line with the recommendation of former RBI governor Bimal Jalan-led panel constituted to review the RBI’s Economic Capital Framework (ECF).

Need of Reviewing Economic Capital Framework

  • Current ECF is based on a conservative assessment of risk by the RBI which leads to unnecessary lock up of funds by the RBI. As per the government, reserves with RBI are in excess of ....
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