Skip to main content

Panel on RBI Reserves May Meet Again

By
The high-level Bimal Jalan panel could hold another meeting before submitting its report on the Reserve Bank of India’s economic framework that will dictate how much of its surplus could be transferred to the government and when. This follows a bureaucratic reshuffle late on Wednesday evening. “We could hold another meeting as a new economic affairs secretary has been appointed,” said a person familiar with the matter. The call will be taken in some time, the person told ET. ET had reported that the recommendations of the report weren’t unanimous with Subhash Chandra Garg having dissented. Garg was transferred to the power ministry from his post as economic affairs secretary on Wednesday. The panel favoured periodic transfers of the RBI’s surplus reserves to the government over three to five years, contrary to the government’s expectation of a lumpsum payment. Any additional fund transfers from the RBI will help the government bridge its fiscal deficit as also meet other obligations. The panel held its last meeting on July 17 to finalise the recommendations. The report is now being given the finishing touches, said the person cited above. The committee was to submit the final report in 15 days to the RBI.

The six-member panel was set up in December 2018 by the RBI to review its economic capital framework (ECF) following several exchanges between the central bank and the finance ministry on the issue. The government had invoked powers under rarely used Section 7 of the RBI Act in October 2018 seeking consultations with the central bank on 12 issues including the ECF. The government wanted a substantial transfer from RBI’s ?9.6 lakh crore reserves. Most of the RBI’s income accrues from interest earned on its foreign reserves invested overseas and that on rupee securities in India. The panel has also mooted a periodic review of the economic capital framework or ECF of the central bank to decide the appropriate level of reserves for the RBI.

The Economic Times, 26th July 2019

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more