The 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 “
2 The brokerage report said as per its stress tests, the central bank can transfer Rs 1 trillion to the government if the transfer is limited to passing excess contingency reserve and can go up to Rs 3 trillion if the total capital is included.
3. Giving a break-up, the report said Rs 1.05 trillion can be transferred if the contingency reserve is capped at 3.5 percent of the RBI book. It further said this level will be 75 percent higher than the average of BRICS economies, excluding India.
4 Limiting the appreciation cover in RBI's currency and gold revaluation account to 25 percent (Rs 53.25 per USD) will release about Rs 72,000 crore to the government,
5. It also said capping the overall reserves at 20 percent of the RBI's book as against 28.3 percent now and higher than 18 percent recommended by the Usha Thorat panel will be able to release Rs 3.11 trillion.
6. The statutes do not prohibit transfer of excess capital to the government, it said, pointing out that the RBI Act places no bar as long as government maintains Rs 5 crore of reserve funds under Sec 46 of the RBI Act.
7. While Section 47 enjoins the RBI to credit its annual surplus to the national exchequer, after provisions, it does not place any restrictions on further transfers, it added.
8. The RBI's contingency reserves at 7 percent are higher than the BRICS (excluding India) average of 2 percent, it said, adding the revaluation reserves are also on the higher side relative to BRICS central banks.
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