New Delhi: The Bimal Jalan panel may get more time to finalise its report on excess capital transfer from the RBI to the government as Subhash Chandra Garg has been moved out from the finance ministry, sources said.
Garg was transferred to the power ministry last week before he could sign the report as it was not finalised by then.
The recommendations are not unanimous, with Garg having submitted a dissent note, sources said.
They added that the government is looking to replace its representative on the panel following the transfer of the former economic affairs secretary.
The extended deadline of the Bimal Jalan committee -- constituted to assess the optimum size of capital reserves that the Reserve Bank of India (RBI) should hold -- ended in July.
The six-member panel, under former RBI Governor Jalan, was appointed on December 26, 2018, to review the economic capital framework (ECF) for the RBI after the finance ministry wanted the central bank to follow global best practices and transfer more surplus to the government.
As per various estimates, the RBI has over Rs 9 lakh crore of surplus capital with it.
The surplus capital transfer would help the government meet its fiscal deficit target as it will come as a windfall to the exchequer.
The government has set a fiscal deficit target of 3.3 per cent of the gross domestic product (GDP) for the current fiscal, revised downward from 3.4 per cent pegged in the interim Budget in February.
Besides surplus capital transfer, the government is expecting Rs 90,000 crore dividend from the RBI in the current financial year as against Rs 68,000 crore received last fiscal.
When asked about presenting the report to the RBI, which constituted the panel last year, the sources said that after editing, the date will be sought for submission.
The ECF panel was mandated to submit its report to the RBI within 90 days of its first meeting which took place on 8 January this year. Following this, the panel was given a three-month extension.
The other key members of the panel include Rakesh Mohan, former deputy governor of RBI as the vice-chairman, RBI deputy governor N S Vishwanathan, and two RBI central board members -- Bharat Doshi and Sudhir Mankad.
The panel has been entrusted with the task of reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks.
The government and the RBI, during the tenure of the previous governor Urjit Patel, had been at loggerheads over the surplus capital with the central bank.
The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by the central bank is well above the global norm of around 14 per cent. Following this, the RBI board in its meeting on November 19, 2018, decided to constitute a panel to examine the ECF.
In the past, the issue of the ideal size of the RBI reserves was examined by three committees -- V Subrahmanyam in 1997, Usha Thorat in 2004 and Y H Malegam in 2013.
While the Subrahmanyam panel recommended building a 12 per cent contingency reserve, the Thorat committee suggested it should be maintained at a higher level of 18 per cent of the total assets of the central bank.
The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam panel.
The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually but did not prescribe any particular number.
According to a report by Bank of America Merrill Lynch, the Jalan committee might identify an excess buffer of up to Rs 3 lakh crore. This includes the excess capital in contingency reserves and also revaluation of reserves.
Halving of the contingency reserves to a level of 3.25 per cent from the present 6.5 per cent would release Rs 1.282 lakh crore, the report said, pointing out that the level was still 50 per cent higher than what central banks in the BRICS (Brazil, Russia, India, China and South Africa) grouping had.