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).
Background
There was a debate about how much surplus of the Reserve Bank of India (RBI) is to be transferred to the government of India. Current ECF is based on a conservative assessment of risk by the RBI which leads to ....
