RBI can transfer Rs 1 trillion of excess reserves to govt: report

Reserve Bank has “more than adequate” reserves and that it can transfer over Rs 1 trillion to the government after a specially constituted panel identifies the “excess capital”, says a report.

An RBI board meeting had last on Monday decided to form a committee, which is likely to be announced later this week.

“We expect the proposed committee on the RBI’s economic capital framework (ECF) to identify Rs 1-3 trillion which is 0.5-1.6 per cent of GDP as excess capital,” analysts at Bank of America Merrill Lynch said in a note Monday.

Giving a break-up, the report said Rs 1.05 trillion can be transferred if the contingency reserve is capped at 3.5 per cent of the RBI book. It further said this level will be 75 per cent higher than the average of BRICS economies, excluding India.

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