Time To Tweak RBI Dividend Formula: Experts

New Delhi: RBI’s dividend transfer to the government based on Bimal Jalan committee recommendations has ‘stood the test of time’ and only some tweaking may be required for the coming five years, a government source said on Friday.

The source said that at a time when the economy is seeing a steady, consistent growth, some alteration in dividend transfer formula may be required to suggest what should be the set formula for the next five years. The source said the dividend transfer so far has been calculated based on the Bimal Jalan-panel’s ECF recommendations and certainly the time to review the framework has come.

“The Bimal Jalan panel recommendation has stood the test of time, even during Covid. I don’t see Jalan panel formulations coming to such an end. Some kind of alterations will happen and RBI is working on it, may be some tweaking (of the panel recommendations),” the source said. The RBI gives dividend to the government on the basis of its Economic Capital Framework (ECF), which was adopted in August 2019 based on Bimal Jalan-led Expert Committee report. The committee had suggested maintaining the Contingent Risk Buffer (CRB) between 5.5 to 6.5 per cent of the RBI’s balance sheet. Last week, the RBI board had reviewed the ECF, which serves as the basis for determining the surplus transfer to the government.