Government’s fiscal math on track, don’t need cash from RBI: Finance ministry

P Chidambaram during his press meet at West Bengal Pradesh Congress office at Bidhan Bhawan in Kolkata on Thursday

Most central banks around the world keep 13 per cent to 14 per cent of their assets as reserve, compared with the Reserve Bank's 27 per cent, the official said. "There is no proposal to ask RBI to transfer 3.6 lakh crore or 1 lakh crore, as speculated", he tweeted.

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.

Garg added that the only proposal concerning the reserves that the government was discussing was to fix the appropriate economic capital framework of the RBI. Garg said there was "misinformed speculation" in the media, and that the government's fiscal math was "completely on track".

The government on Friday said it is not seeking Rs 3.6 lakh crore capital + from the Reserve Bank but is only in discussion for fixing appropriate economic capital framework of the central bank. "Finding all avenues closed, in desperation, the government has demanded Rs 1 lakh crore from the reserves of RBI", he had stated.

With the government and the Reserve Bank of India being at loggerheads over issues such as allocation of the central bank's capital, former RBI board member YH Malegam said there is no provision in the RBI Act that says the central bank's reserves can be paid to the government.

The matter is pending before the board of the Reserve Bank of India and is likely to be taken up again at its next meeting likely on 19 November, the official told reporters, asking not to be identified citing rules.

The central bank expert said that the RBI board and the RBI governor have concurrent powers and that the board can only offer guidance to the governor and cannot suo motu direct him/her to do something.

The RBI and the government have not been on the same page on different issues for some months now. The disagreements came out in open when RBI deputy governor Viral Acharya, in a hard-hitting speech, said failure to defend the central bank's independence would "incur the wrath of the financial markets".

The RBI distributes a part of the profits it generates as dividends to the government while transferring the rest to its reserves.

The government and the RBI have been clashing on several issues including the reserves question, and a government proposal to ease the capital and lending curbs for state-run banks.

Earlier this year, the RBI made a decision to pay Rs 50,000 crore as dividend to the government in line with the Union Budget provisions, helping the Centre to stick to its fiscal road map. The RBI made a dividend payout of Rs 30,659 crore for the fiscal ended June 2017.

RBI transfers a surplus from its balance sheet to the Centre every year as the dividend.

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