The Bimal Jalan panel, which is examining the Reserve Bank of India’s (RBI’s) economic capital framework, on 5 August 2019 decided to huddle again before submitting its report with the central bank, most likely this month, a source privy to the development said. While the panel is set to recommend the transfer of the RBI’s excess reserves to the government in a maximum of five years, the government is yet to take a final call on the dissent note submitted by former finance secretary Subhash Chandra Garg (who has now been shifted to the power ministry) on its suggestions.



  1. New finance secretary Rajiv Kumar, who replaced Garg on the Jalan panel, took part in its meeting for the first time and is expected to take some time to go through various recommendations and Garg’s dissent, and make a final decision. 
  2. While Jalan is learnt to be still trying to forge a consensus, even if the government chooses to retain Garg’s dissent, it won’t make any material change to the panel’s recommendations, as his was a minority view.
  3. Garg had submitted dissenting views on its recommendations after it was clear that the review of the Economic Capital Framework (ECF) would result in lower-than-expected transfer of the central bank’s surplus to the government. 
  4. He had reservations on the methodology endorsed by other members of the panel to arrive at the size of the RBI’s “surplus”, and also wanted the entire transfer in one go. Before Garg’s transfer, the panel was expected to submit its report by the first week of August.
  5. The latest FY20 Budget has pegged RBI’s dividend at Rs 90,000 crore, against Rs 68,000 crore last fiscal, even without factoring in the ECF review. 
  6. So the surplus transfer could help the government tide over any potential shortfall in its tax revenue and contain fiscal deficit unless the panel ties the transfers to specific use like retiring public debt or recapitalisation of state-run banks.


  1. In the past, the issue of the ideal size of the Reserve Bank of India reserves was examined by three committees -- V Subrahmanyam in 1997Usha Thorat in 2004 and Y H Malegam in 2013.
  2. While the Subrahmanyam panel recommended for building a 12 per cent contingency reserve, the Thorat panel suggested it should be maintained at a higher 18 per cent of the total assets of the central bank.
  3. The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam committee.
  4. The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually but did not ascribe any particular number. 

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