HYDERABAD: Rs 9.6 lakh crore — that’s the tug of the ongoing RBI-government tussle. At 28 per cent of the total assets, RBI’s reserves are the largest among all central banks, yet it is unwilling to part with it citing credibility crisis, and weakening balance sheet.
Experts even warn that the revaluation reserves, which are dependent on currency and gold prices, cannot be toyed with, while former RBI deputy governor Rakesh Mohan noted that raiding RBI’s capital creates no new government revenue, and ‘only provides an illusion of free money in the short-term.'
In principle, however, this excess capital belongs to the government, which now intends to propose a surplus distribution policy.
“These reserves have been built at an average rupee value of 45 (per US dollar) or so. It’s unlikely that rupee will fall to, or below, 45 now. We need to identify an exchange rate beyond which the rupee cannot depreciate and determine the surplus based on that value,” an RBI official told TNIE, adding, “It’s incorrect not to distribute the surplus altogether."
"It’s an extraordinary situation. Nowhere in the world does any reserve bank have such reserves. There has to be proper appropriation. A formula has to be followed,” he emphasised.