Sitharaman dismisses criticism about RBI's decision, says outlandish to question its credibility

Finance Minister Nirmala Sitharaman on Tuesday dismissed criticism about the RBI's decision to transfer Rs 1.76 lakh crore to the government and said that any suggestion concerning the credibility of the central bank and the Jalan Committee "seems a bit outlandish".

"I want to say that Bimal Jalan Committee had eminent experts in it. It was constituted by the Reserve Bank themselves, not by the government. They have had several sittings and have come out with formulas...So, this is a committee which the Reserve Bank appointed," she told reporters here while responding to a question that RBI's international credibility AAA rating could be affected as it has reduced its surplus by transferring the amount to the government.

"It had experts and they have given a formula based on which the amount is arrived at. Now any suggestion about the credibility of the Reserve Bank therefore for me seems a bit outlandish, considering the committee was appointed by Reserve Bank themselves," Sitharaman added.

The minister mentioned that the decision was taken based on the recommendation of a committee constituted by the RBI itself and said it is very worrying that questions are being over its formulation.

"They have themselves given an explanation through media that financial stability and surplus to meet any emergency and contingency have all been factored by the committee and they arrived at the formulation of a formula. So, comments given on the credibility of the Reserve Bank I am afraid is commenting of Reserve Bank itself and their selection of the committee itself," she said.

"The committee independently arrived at a formula by itself. Therefore, being a part of the government it is strictly not my business to talk about but it is very worrying that a committee appointed by the Reserve Bank of experts who had several meetings and come to a formulation are now being questioned," Sitharaman said.

On Monday, a press note from the RBI said that it has decided "to transfer a sum of Rs 1,76,051 crore to the Government of India comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board today."

The top bank's decision is in line with the recommendations of the Bimal Jalan Committee.