Jalan panel proposes change in RBI accounting year, transparent accounts

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  1. The Reserve Bank of India(RBI) has accepted the Bimal Jalan panel recommendations.It was set up to review the RBI’s economic capital framework.
  2. The economic capital framework reflects the capital that an institution requires or needs to hold as a counter against unforeseen risks or events or losses in the future.
  3. The panel has recommended a review of the RBI’s Economic Capital Framework(ECF) every five years.However,if there is a significant change in the RBI’s risks and operating environment,an intermediate review may be considered.
  4. The panel has suggested that RBI’s accounting year of July-June can be brought in alignment with the fiscal year of April-March from the financial year 2020-21.
  5. This would allow RBI to provide better estimates of the projected surplus transfers to the government for the financial year for budgeting purposes.
  6. The panel has also recommended a more transparent presentation of the RBI’s annual accounts with regard to the components of economic capital.
  7. The panel has also suggested to remove the interim payout structure to government in general circumstances.It has said that payment of an interim dividend may be restricted to extraordinary circumstances.