The tug of war between the Centre and the RBI is expected to be one of the key points of discussion at the RBI board meet on November 19.
The meeting of the central board of the RBI on 19 November is likely to be stormy. "No government in the past had asked for the reserve in RBI", Chidambaram said in Guwahati on Friday.
The controversy over the transfer of surplus reserves started when RBI Deputy Governor Viral Acharya, in his speech on October 26, quoted Alberto Ramos, Argentinian analyst at Goldman Sachs, as saying, "Using central bank reserves to pay government obligations is not a positive development and the concept of excess reserves is certainly open to debate".
The Congress party had latched on to the issue with former finance minister P Chidambaram accusing the government of demanding Rs 1 lakh crore from the reserves of the central bank to accelerate spending against the backdrop of a tight fiscal situation. Garg added that the government was in discussions with the central bank only to fix its appropriate economic capital framework. As of June 2018, the total amount in these three types of reserves exceeded ₹9 trillion with more than ₹6.9 trillion in valuation reserves, RBI's annual accounts show.
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Economic capital framework refers to the capital required by the central bank while taking into account different risks.
He added that it would be hard to quantify a percentage amount for how much of RBI's profits should be transferred to its reserves. "A thorny ongoing issue on this front has been that of the rules for surplus transfer from the RBI to the government". There is no proposal to ask RBI to transfer ₹3.6 (lakh crore) or ₹1 lakh crore, as speculated. He is also a former chairman of the Institute of Chartered Accountants of India.
Media reports had said that the government was insisting on a payout from the central bank's reserves to tide over a tight fiscal situation ahead of state polls and general elections in 2019.
However, the government clarified earlier today that the above-mentioned reports were a product of speculation and that it had no such demand from the RBI.