Contingency Reserve Darts Up To 11.7% Of Assets
The contingency reserve (CR) and asset development reserve of the Reserve Bank of India (RBI) have increased to a combined 11.7 per cent of the total assets as on June 30, 2002, as against 9.9 per cent in the previous year.
The RBI has reached this level in a faster than intended manner. The apex bank had set a target of 12 per cent of the total assets to be achieved in phases by 2005.
The CR is maintained by the central bank to enable it to absorb unexpected and unforeseen contingencies. The balance in this reserve has risen by 32.64 per cent in the year to Rs 48,434.17 crore as against Rs 36,514.13 crore in the previous year.
The central bank has transferred to the CR an unutilised balance of Rs 4,224 crore from the National Industrial Credit Fund, Rs 700 crore from the National Housing Credit Fund and Rs 6,996.04 crore from the income. The central banks said the balance in the CR was sufficient to meet contingent liabilities.
The asset development reserve was created in 1997-98 to meet the internal capital expenditure of the RBI and to make investments in its subsidiaries. The aim is to reach one per cent of the RBI