RBI crisis fund short of target - The Hindu

RBI crisis fund short of target - The Hindu


RBI had on its own accepted a target of 12 per cent of total assets for Contingency Reserves plus Asset Development Reserve long ago. The central bank almost touched this level of reserves, at 11.9 per cent, in 2009. Since then the erosion started. Curiously, in 2014 an internal panel advised that the level of reserves was adequate for subsequent three years, presumably on the basis of which transfer to reserves is not happening for the last two years. Even assuming the advice was right, it is intriguing that the levelof reserves as a percentage of total assets (growing fast) is not being maintaines. RBI must have a relook and convince GOI the need to transfer surpluses to the present Contingency Fund and Asset Development Fund at least until appropriate amendments are made in the RBI Act to increase the capital and GOI contributes to RBI's share capital to make up for the shortfall in the target for reserves accepted by the central bank.

M G Warrier, Mumbai


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