RBI seeks govt nod for bigger contingent risk buffer band

The Reserve Bank of India's (RBI's) central board, which met last week and reviewed the economic capital framework (ECF), has sought the government's approval to expand the range of the contingent risk buffer (CRB), multiple sources aware of the development told Business Standard.

- MANOJIT SAHA

The buffer is at 5.5-6.5 per cent of the RBI's balance sheet, which is in accordance with the recommendations of the Bimal Jalan committee. The surplus, which the RBI transfers to the government, depends on how much risk buffer it wants to maintain. A higher risk buffer would mean a lower amount of transferable surplus and vice versa.

"In the last five years, the framework, which was recommended by the Jalan committee, has largely worked well," said a source. "Given the kind of vulnerabilities and fluctuations we have, we are trying to see how a larger range may be thought of," the source added.