Jalan panel reviewing RBI's economic capital framework to meet on Wednesday

This will be the first meeting of the six-member expert committee since Subhash Chandra Garg was abruptly shifted from finance to power ministry last month

Former Reserve Bank of India (RBI) governor Bimal Jalan-led committee reviewing the central bank's economic capital framework is set to meet on Wednesday to finalise its recommendations, according to a source.

This will be the first meeting of the six-member expert committee since Subhash Chandra Garg, who had refused to sign on the panel's report, was abruptly shifted from finance to power ministry last month. Rajiv Kumar, who replaced Garg as finance secretary, will now be the government’s representative on the panel. 

The committee had last met on July 17 to finalise the report.

“The committee will finalise and submit its report to the RBI governor in August,” said a committee member, requesting anonymity.

The committee had sought the RBI's views on the way forward after Garg’s transfer. Garg was keen to submit a dissent note to the panel as he had not agreed to its recommendation for a ‘nominal’ surplus transfer to the central government in a phased manner. Garg, according to sources, wanted to raise the issue separately in the RBI’s central board as he was in favour of a one-time transfer of surplus from the RBI to the government.

Kumar is expected to review the opinion of his predecessor and may take a fresh call on the government’s position on the panel’s recommendations in a bid to end the stalemate, which has led to a delay in submission of the report. 

According to sources, the committee’s report has proposed a formula for a nominal transfer of a portion of the RBI’s reserves to the government in a period of three-five years, in its last meeting held in July.

Apart from Jalan and Kumar, former RBI deputy governor Rakesh Mohan, RBI deputy governor N S Vishwanathan, RBI central board directors Bharat Doshi and Sudhir Mankad are part of the expert committee. The panel, which was formed in December, was expected to submit its recommendations in early April this year.