.....It is evident that RBI is following a very conservative practice of (a)
not routing the unrealised gains through the Profit and Loss Account,
and (b) creating a CR on the market value of assets instead of the cost
price. As RBI transfers balance profit to the central government, these
accounting practices are depriving the government of its share of
surplus and building reserves much beyond stated needs.......
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1 comment:
RBI’s income increased during 2011-12 by about 43 per cent as compared to the previous year (from Rs 37070 crore to Rs 53176 crore). Transfer of surplus profit to GOI was Rs 16010 crore which as percentage to gross income is lower by around 10.4 per cent as compared to 2010-11. Obviously, the transfer of ‘surplus income’ to government in a routine manner when the reserves position of the central bank shows a declining trend needs a review. Considering the size of RBI’s balance sheet recouping the reserves position to healthier levels will be a Herculean task.
Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks RBI has to absorb from time to time, GOI should support the central bank’s efforts to augment its reserves at least on par with the 12 per cent norm of capital adequacy RBI expects from banks it supervises.
RBI, on its part, should think in terms of generating reasonable income from deployment of captive funds it is mandated to manage, without any compromise on safety of investments. In this context, the addition of about 200 tons to holdings in gold three years back was a welcome move. The central bank should further augment the gold component in reserves by tapping domestic gold stock with policy and legislative support from GOI.
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