Economic Capital Framework

RBI recently approved the transfer of Rs 1.76 lakh crore dividend and surplus reserves to the government which is in line with the recommendation of former RBI governor Bimal Jalan-led panel constituted in 2018 to review the RBI’s Economic Capital Framework (ECF).

  • Economic Capital Framework refers to the risk capital required by the central bank while taking into account different risks. It is required as a counter against unforeseen risks or events or losses in the future.

Important Recommendations of Jalan Committee

  • The RBI should maintain a Contingent Risk Buffer, which mostly comes from the Contingency Fund (CF), of between 5.5-6.5% ....
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