RBI board approves Rs 1.76 lakh crore transfer to govt

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  1. The Reserve Bank of India(RBI) has decided to transfer a sum of 1.76 lakh crore rupees to the government.The surplus transfer was finalised in keeping with the recommendations of a committee headed by former RBI governor Bimal Jalan.
  2. RBI had constituted a panel on Economic capital framework(ECF) to address the issue of RBI reserves.The panel was headed by Bimal Jalan.
  3. The panel has recommended a distinction between the two components of the economic capital of RBI which are (a)Revaluation reserves and (b) Realized reserves.
  4. Revaluation reserves comprise of periodic marked-to-market notional gains or losses in values of foreign currencies and gold, foreign securities and rupee securities and a contingency fund.
  5. Realized reserves is a form of a contingency fund for meeting all risks or losses primarily built up from retained earnings.It is also called the Contingent Risk Buffer(CBR).
  6. The panel headed by Bimal Jalan has given a range of 5.5-6.5% of RBI’s balance sheet for Contingent Risk Buffer.Hence,the RBI has decided to set the CBR level at 5.5% of the balance sheet while transferring the remaining excess reserves to the government.
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