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Informist, Thursday, May 15, 2025

--RBI: Central Board reviewed Economic Capital Framework 

--RBI: Central Board of the RBI met on Thu 

NEW DELHI – The Reserve Bank of India's Central Board of Directors met on Thursday under the chairmanship of RBI Governor Sanjay Malhotra to review the economic capital framework of the central bank. The meeting was attended by deputy governors -- M. Rajeshwar Rao, T. Rabi Sankar, Swaminathan J., and Poonam Gupta – Finance Secretary Ajay Seth, Financial Services Secretary M. Nagaraju, Satish K. Marathe, S. Gurumurthy, Revathy Iyer, Sachin Chaturvedi, Venu Srinivasan, Pankaj Ramanbhai Patel and Ravindra H. Dholakia, the RBI said in a release.

At the post-policy conference in February, Malhotra had said that the RBI is conducting an internal review of the economic capital framework recommended by the Bimal Jalan Committee, adopted in 2019. 

The RBI had constituted the Jalan Committee in 2018 to review the economic capital framework. The economic capital framework provides the methodology which determines the appropriate level of risk provisions that the central bank has to make and the surplus that it transfers to the government. The Jalan committee had recommended that the risk provisioning under the contingent risk buffer be maintained within a range of 5.50% to 6.50% of the RBI's balance sheet.

The central board of the RBI had maintained the contingent risk buffer at 5.50% of the central bank's balance sheet to support growth and overall economic activity during 2018-19 (Apr-Mar) and FY22. As economic growth revived in FY23, the buffer was increased to 6.00%. The buffer was further increased to 6.50% for FY24.

Informist reported citing sources earlier in the day that the RBI's Central Board of Directors is likely to meet on May 23 to discuss and approve the transfer of surplus to the Centre for FY25. End

Reported by Pratiksha

Edited by Saji George Titus

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