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Jalan Committee: A case of both glass half-full and half-empty!

Apr 27, 2020 01:15 PM IST

The Jalan panel has said interim dividends should be resorted to only in extreme cases, but the definition of extreme lies with the government

Amol Agrawal

The high-profile Bimal Jalan committee submitted its report to the RBI after much wait and anticipation. After accepting and applying the committee’s recommendations, the RBI transferred Rs 1.76 lakh crore to the government.

This amount comprises RBI’s annual profit of Rs 1.23 lakh crore and Rs 52,637 crore excess reserves/provisions written back. It is surprising that most of the Rs 1.76 lakh crore bonanza came not from recommendations of the Jalan panel, but from RBI’s treasury operations.

This piece focuses on excess reserve, which again is no small amount as it is larger than the entire surplus of Rs 50,000 crore transferred last year. But before getting into further details, let us understand what these reserves and surplus mean by way of an illustrative example.