Behind govt-RBI rift: DEA's insistence on Rs 3.6-trillion excess capital

The buzz in bureaucratic circles is that whether through written communication or informal channels, instead of negotiating on contentious issues, the North Block tried to force its writ upon the RBI

The tussle between the Reserve Bank of India (RBI) and the government may have reached its breaking point when the Finance Ministry’s Department of Economic Affairs (DEA) claimed that the central bank should transfer Rs 3.6 trillion in excess capital to the government.

The RBI transfers a surplus from its balance sheet to the Centre every year as dividend. For its July 2016-June 2017 fiscal year, it had transferred Rs 306 billion of its surplus to the government. Economic Affairs Secretary Subhash Garg publicly asked the RBI for another Rs 130 billion from its contingency reserves to take the total