New Delhi: The Central Board of the Reserve Bank of India on Monday decided to transfer a sum of Rs 1,76,051 crore to the Government of India comprising of Rs 1,23,414 cr of surplus for year 2018-19 and Rs 52,637 crore of excess provisions identified as per revised Economic Capital Framework adopted at the meeting of the RBI Board.

This comes after the board accepted the recommendation of a six-member panel headed by its former Governor Bimal Jalan on the transfer of excess reserves to the government. The other key members of the committee include Rakesh Mohan, former deputy governor of the RBI, as vice-chairman; Finance Secretary ajiv Kumar; RBI Deputy Governor N.S. Vishwanathan; and two RBI central board members—Bharat Doshi and Sudhir Mankad.

On December 26, 2018, the RBI, in consultation with the government, had constituted the panel to review the Extant Economic Capital Framework of the RBI after the Ministry of Finance wanted the central bank to follow global best practices and transfer more surplus to the government.

Reports claimed that the committee’s recommendations were based on the consideration of the role of central banks’ financial resilience, cross-country practices, statutory provisions and the impact of the RBI’s public policy mandate and operating environment on its balance sheet and the risks involved.

The committee’s recommendations were guided by the fact that the RBI forms the primary bulwark for monetary, financial and external stability. Hence, the resilience of the RBI needs to be commensurate with its public policy objectives and must be maintained above the level of peer central banks as would be expected of a central bank of one of the fastest-growing large economies of the world.

(With inputs from agencies)