RBI in ‘formidable position’ to fulfill public policy mandates: DG Murmu

The Reserve Bank of India (RBI) has an economic capital that’s 25 percent of its balance sheet and puts it in a “formidable position” to fulfil its public policy mandates while ensuring monetary and financial stability, said Deputy Governor Shirish Chandra Murmu on Friday.

- ANUPREKSHA JAIN

“The prudent accounting policies over the years have ensured that RBI has a strong and resilient balance sheet, with risk provisions in the form of realised equity and revaluation balances currently at 7.5 per cent and 17.4 per cent of the balance sheet, respectively,” Murmu said at the International Conference on Central Bank Accounting Practices in Mumbai.

‘The RBI has a transparent, publicly disclosed, and rule-based surplus distribution policy under the Economic Capital Framework (ECF). The framework recognises that realised equity should cover monetary and financial stability risks, credit risk, and operational risks, while the revaluation balances should cover market risk, he said.

“After making the required provisions, the remaining surplus is transferred to the government. Since the introduction of the ECF, RBI has consistently maintained its risk buffers at the prescribed levels, even in the face of unprecedented challenges such as the Covid-19 pandemic and the subsequent global monetary tightening,” he said, adding that the ECF was recently reviewed internally and risk assessment has been made more granular.