Govt says not seeking massive reserve transfer from RBI, in talks for 'capital framework'

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Amid a face-off with the RBI, the government Friday said it is discussing an "appropriate" size of capital reserves that the central bank must maintain but denied seeking a massive capital transfer from the Reserve Bank.

The Reserve Bank of India (RBI) has a massive Rs 9.59 lakh crore reserves and the government, if reports are to be believed, wants the central bank to part with a third of that fund -- an issue which along with easing of norms for weak banks and raising liquidity has brought the two at loggerheads in recent weeks.

Economic Affairs Secretary Subhash Chandra Garg took to the twitter to clarify that the government wasn't in any dire needs of funds and that there was no proposal to ask the RBI to transfer Rs 3.6 lakh crore.

The government, he said, is on track to meet the fiscal deficit target of 3.1 per cent for the financial year 2018-19.

"There is no proposal to ask RBI to transfer (Rs) 3.6 or (Rs) 1 lakh crore, as speculated," he tweeted. "Government's FD (fiscal deficit) in FY 2013-14 was 5.1%. From 2014-15 onwards, Government has succeeded in bringing it down substantially. We will end the FY 2018-19 with FD of 3.3%. Government has actually foregone (Rs) 70,000 crore of budgeted market borrowing this year."