RBI board meet today, likely to discuss on Bimal Jalan report

New Delhi, Aug 26: The central board of the Reserve Bank of India (RBI) will hold a meeting on Monday to finalise its annual accounts, it is also likely to take up the Bimal Jalan committee's recommendations on Economic Capital Framework (ECF) along with the dividend payment to the government.

On Friday, the committee had submitted its report to the RBI Governor Shaktikanta Das. The report, which recommends transfer of surplus reserves to the government in a staggered manner over three-five years based on a predetermined formula, may be put on the Reserve Bank of India (RBI) website later for public access.

The RBI follows a July-June financial year and the dividend is usually distributed in August after annual accounts are finalised. For FY20, the government has pegged a Rs 9,000 crore dividend from the RBI.

Reportedly, in August 2018, the RBI board had approved a transfer of Rs 50,000 crore to the government for 2017-18 up 63% from Rs 30,659 crore for 2016-17. The RBI's surplus had dropped in 2016-17 due to printing costs during demonetisation.

With economy facing a slowdown in key sectors, the government is looking at RBI dividends and surplus to step up public investment and tackle funding gaps.

But any decision on capital transfers based on the panel's proposals may not come on Monday as the board members may need more time to study the recommendations.

The board may announce the normal dividend to be paid to the government for FY19 based on the surplus.

The government has already received Rs 40,000 crore during FY19. In February this year, the RBI had announced a Rs 28,000 crore interim dividend taking the total dividend transfer to the government to Rs 68,000 crore. The RBI Central Board will have to approve the Rs 28,000 crore interim dividend.

So far the extent of capital reserves to be transferred to the government based on the Jalan panel report has been a matter of speculation.

According to BofA Merrill Lynch, the ECF is expected to peg the excess capital of the RBI at Rs 1-Rs 3 lakh crore, where Rs 1 lakh crore is from contingency reserves and Rs 2 lakh crore from revaluation reserves.

Today the Sensex opened up with 36,854.92, up by 153.76 points. Indian Rupee is at 71.95 compared to the US Dollar. As per 2017-18 annual report of the RBI, the reserves stand at Rs 9.6 trillion.