RBI Reviews Jalan Panel's Economic Capital Framework

Mumbai, Feb 7 (PTI) Reserve Bank Governor Sanjay Malhotra on Friday said the central bank is carrying out an internal review of the economic capital framework (ECF) announced by the Bimal Jalan-led committee.

The review of the framework determining the Reserve bank of india's (RBI's) surplus transfers to the government is being undertaken because the six-member panel had recommended a review every five years, Malhotra said.

"Its an internal review which was required to be done because the time is over," he told reporters at the central bank headquarters at the customary post-policy press conference.

At present, the framework has a provision for a contingency risk buffer to cover unforeseen contingencies like monetary rate policy risks and depreciation of securities values and it is maintained as a percentage of the RBI balance sheet size.

The buffer is capped at 6.5 per cent of the balance sheet, and the central bank had transferred a record Rs 2.11 lakh crore of surplus to the government last year.

Earlier, Malhotra said there are tremendous uncertainties the country has to grapple with, especially on the external front.

He, however, was quick to clarify that given the heightened uncertainties, it should not be deduced that the review will opt for pushing up the buffer.