Is excess capital for RBI a necessary evil?

The RBI has to manage systemic risk and the financial system as a whole. It can face situations where it must act as lender of last resort. It must have adequate capital, reserves and liquidity

The Reserve Bank of India (RBI) has announced the constitution of a six-member panel to look into its economic capital framework. A reference to economic capital framework had come up in the context of adequacy of capitalisation and reserves at the central bank. Various stakeholders have been involved and each has its own viewpoint on the extent of capital and reserves at the bank. In determining the RBI's capital adequacy, the perceptions of the government, private sector and RBI differ vastly, driven by the interests they individually serve. As beauty lies in the eye of the beholder, the definition of