Economic capital framework: Fixing something that ain't broke

Abstract

The government's move for another committee to look at the economic capital framework for RBI looks like an unnecessary step. The government has announced another committee to look at the economic capital framework for the Reserve Bank of India (RBI). This looks like an unnecessary step, given that only a few years back in 2013-14 RBI had referred the matter to a technical committee headed by Mr. YH Malegam.

The terms given to the technical committee in 2013-14 included "to review the level and adequacy of internal reserves and surplus distribution policy of the RBI." The current committee headed by Bimal Jalan is also charged with similar terms of reference. The current government made an unreasonable demand to dip in to the accumulated surpluses and reserves of the RBI and much controversy and a resignation later, had to find a face-saving measure to wriggle out of the situation by referring the brazen act to a committee. Let me explain why it is brazen. Read more at: https://www.businesstoday.in/opinion/columns/economic-capital-framework-fixing-something-that-is-not-broke/story/304960.html