RBI to Stop Transferring Past Reserves

The Reserve Bank of India (RBI) will not immediately transfer surplus capital, which is set aside as reserves over the years, to the government. The central bank audit committee has, however, cleared an interim dividend of Rs 28,000 crore based on a limited audit for the current year and the same is likely to be declared after the central bank’s board meeting on February 18.

The demand to transfer capital surplus was made by the Centre after its attempts to get the RBI to part with what was described "excess reserves" was turned down and the issue of the capital framework was referred to a committee under Bimal Jalan. The government had argued that the central bank had more reserves than many of its peers.

The latest move by the department of economic affairs is part of a series of demands on regulators, including Sebi, which market players are seeing as overreach by the government, especially after it pushed Urjit Patel to resign as RBI governor amid the threat of issuing a directive to the banking regulator.

RBI Governor Shaktikanta Das said, “There are several issues which are under discussion between government and RBI and a decision is taken after a discussion. Any decision of RBI is driven by principle and accounting norms.”