- The Reserve Bank of India has accepted all the recommendations of the Bimal Jalan Committee, set up to review the Reserve Bank of India’s (RBI’s) economic capital framework.
- Its recommendations include:
- The framework may be periodically reviewed after every five years.
- To align the RBI’s accounting year (July-June) with the financial year (April-March)which could reduce the need for paying interim dividend. As per the committee, it could reduce the need for interim dividend being paid by the RBI.
- The payment of interim dividend may then be restricted to extraordinary circumstances . For 2018-19, the RBI had paid Rs. 28,000 crore as interim dividend.
- Historically, the July-June year would have been linked to the agricultural seasons which is not a consideration in these times, it said.
- The RBI should put in place a framework for assessing the market risk of its off-balance sheet exposures in view of their increasing significance.
- A clearer distinction between the two components of economic capital — realised equity and revaluation balances — mainly because of the volatile nature of the revaluation balances.
- The central bank pay interim dividend to the government, a practice that started in 2016-17, only under exceptional circumstances.
- The committee was set up to review the RBI’s extant economic capital framework.
