Government And RBI Likely To Appoint Members Of An Expert Committee By This Week

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New Delhi: After the last week’s nin-hour long meeting, the government and the Reserve Bank are likely to appoint members of an expert committee by this week which will look into the economic capital framework (ECF) of the central bank.

In its nine-hour meeting held last week, the RBI’s board had decided to constitute a committee of experts to examine the ECF, the membership and terms of reference of which will be jointly determined by the government and the RBI. It will determine the appropriate levels of reserves the central bank ought to hold.

“The names will be decided by the RBI governor and the Finance Ministry together in next 5 to 6 days,” the source said.

The committee will have minimum of three people, which will include present and past central bankers, and officials from the Finance Ministry, the person said.

“Within two-three months, the committee will submit its recommendations. The idea is to submit the report before the closing of the financial year,” the source added.

As of June 30, 2018, RBI’s reserves stood at Rs 9.43 lakh crore, with a major portion of the reserves coming from contingency fund (Rs 2.32 lakh crore) and currency and gold revaluation account (CGRA) (Rs 6.91 lakh crore). While the contingency fund stood at 6.41 per cent of the total assets of the RBI, the CGRA was 19.10 per cent in the year ended June 30, 2018.

In the past, the issue of the ideal size of RBI’s reserves was examined by three committees -- V Subrahmanyam (1997), Usha Thorat (2004) and Y H Malegam (2013).

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