Weeks after the resignation of Urjit Patel as RBI Governor and subsequent appointment of Shaktikanta Das in his stead, the Reserve Bank of India on Wednesday announced that it has formed an expert committee to look into the central bank's Economic Capital Framework (ECF) -- perhaps the most contentious of all matters involved in the recent high-profile tussle between the RBI and the government.
The Expert Committee whose constitution was approved in Urjit Patel's final 'showdown' RBI board meeting in November, will be chaired by former RBI Governor Dr Bimal Jalan. The vice chairman of the committee is former RBI deputy Governor Dr Rakesh Mohan. The committee also contains one sitting RBI Deputy Governor -- NS Vishwanathan -- as well as current Department of Economic Affairs Secretary Subhash Chandra Garg who has been an ever-present through the RBI vs government tussle and is also an independent board member of the bank. Notably, RBI Deputy Governor Viral Acharya who brought the disquiet between the RBI and the government to the fore with an explosive speech signalling the independence of the central bank was under threat isn't a part of the committee.
While the terms of the committee have been provided along the same lines as one would expect -- a lot of mention of risk provisioning and following global standards -- the key factor is that the committee is to provide a report within 90 days of its first meeting. An expedited timeframe is something the political opposition had pre-emptively alleged while accusing the government of seeking a portion of the RBI's vast reserves surplus to fund populist schemes. The government, on the other hand, has denied this claim, though union minister Piyush Goyal did recently hint with an analogy to the 2008 US subprime crisis that the funds, if transferred, could be used to bail out NPA-laden PSBs.