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    The Reserve Bank of India announced the transfer of 1.76 lakh crore (Rs. 1,760 billion) in surplus reserves to the central government. This was a large amount, 146.8% more than the previous year. The government had pressured the RBI to transfer some of its resources due to fiscal issues. The RBI accepted the recommendations of an expert committee, known as the Jalan Committee, to determine how much could be transferred without compromising the central bank's independence and policy objectives. There is some controversy over whether this large transfer compromises the RBI's independence and turns it into a bank for the government.

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    The Reserve Bank of India announced the transfer of 1.76 lakh crore (Rs. 1,760 billion) in surplus reserves to the central government. This was a large amount, 146.8% more than the previous year. The government had pressured the RBI to transfer some of its resources due to fiscal issues. The RBI accepted the recommendations of an expert committee, known as the Jalan Committee, to determine how much could be transferred without compromising the central bank's independence and policy objectives. There is some controversy over whether this large transfer compromises the RBI's independence and turns it into a bank for the government.

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    22 views11 pages

    FMS Newspaper Article

    Uploaded by

    Nikita
    The Reserve Bank of India announced the transfer of 1.76 lakh crore (Rs. 1,760 billion) in surplus reserves to the central government. This was a large amount, 146.8% more than the previous year. The government had pressured the RBI to transfer some of its resources due to fiscal issues. The RBI accepted the recommendations of an expert committee, known as the Jalan Committee, to determine how much could be transferred without compromising the central bank's independence and policy objectives. There is some controversy over whether this large transfer compromises the RBI's independence and turns it into a bank for the government.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 11

    A Central Bank

    Government Piggy Bank


    Group Number : 2

    Members :
     Nikita Anna Shibu
     Richard Paul John
     Hima Catherine Roy
     Mannya Rachel Abraham
     Anumol Shibu
    Spelling out the government's RBI
    windfall THE HINDU, AUGUST 31, 2019

    The announcement of huge transfer of RBI surplus of Rs


    1.76 lakh crore to the central government.

    • The government facing a resource crunch, has arm


    twisted the RBI to transfer some of its resources.
    • The huge amount of reserves with the central bank is in
    the nature of idle cash which could have been utilized
    more productively in the economy.
    The RBI decided to transfer funds to central government
    by accepting the recommendations of the Jalan
    Committee.
    ( i.e., the expert committee to review the exact economic
    capital framework of RBI headed by Bimal Jalan and with
    eminent central bankers, bureaucrats, economists and
    accountants as its members)
    • RBI Reserves
    i. Contingency fund
    ii. Currency and gold revaluation account
    iii. Asset development fund
    iv. Investment revaluation account - rupee

    • How does RBI build reserves?


    i. Income from 3 sources : interest on government bonds
    held for conducting open market operations, fees from
    government’s market borrowing program and income
    from investments in foreign currency assets.
    ii. Earnings retained after giving dividends to government
    iii. Revaluation of foreign assets and gold
    Why is the RBI payout different this year?

    • Every year RBI Transfers to government.


    • The difference that raised concern is amount of funds
    being transferred by the central bank to the government.
    • This year is much higher than earlier i.e,146.8% more
    than paid last year.
    What is the controversy around the
    transfer ?
    • Turning the central bank into a banker for government.
    • RBI should be independent body-free from government
    influence.
    • Government across the world try to influence the central
    bank in their decision making by various ways
    Are the RBI’S Power Being Diluted?

    • Credibility of RBI
    • Friction between govt. and the governor of RBI.
    • Real impact on transfer of funds.
    What Lies Ahead?
    • Expected to achieve 3% fiscal deficit.
    • Increase the amount of money supply.
    • RBI deputy governors warning.
    Thank you 

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