.....“The balance under CR is maintained to meet any unforeseen contingency or diminution in the value of RBI’s assets. We are not guided by its utilisation or otherwise,” said RBI in an e-mailed response.........
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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.
But despite a transfer of `2348 crore in 2011-12, from income to ADR raising its level to `18214 crore as on June 30, 2012, the CR and the ADR together constituted only 9.7 per cent of the total assets of the Reserve Bank as on June 30, 2012 showing a fall of 0.6 per cent from the level of 10.3 per cent during the previous year, taking the original target of 12 per cent further away. It may be recalled that in 2009 the target was almost in sight when the level reached 11.9 per cent.
To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks the Bank has to absorb from time to time, the central bank’s reserves need to be augmented on an ongoing basis.
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