The Bimal Jalan committee, which was constituted to assess the optimum size of capital reserves that the RBI should hold, has reportedly finalised its report.

The six-member panel, under former RBI governor Jalan, was appointed on December 26, 2018, to review the economic capital framework (ECF) for the Reserve Bank of India (RBI) after the finance ministry wanted the central bank to follow global best practices and transfer more surplus to the government.

As per various estimates, the RBI has more than Rs 9 lakh crore of surplus capital with it.

According to sources, the last meeting was held on July 17 and the report has been finalised.

Asked about the quantum of surplus transfer from the RBI to the government, sources said, it cannot be disclosed now, but the transfer would be periodic and spread over 3-5 years.

The surplus capital transfer would help the government meet its fiscal deficit target as it will come as a windfall to the exchequer.

The government has set a fiscal deficit target of 3.3 per cent of the gross domestic product (GDP) for the current fiscal, revised downward from 3.4 per cent pegged in the interim Budget in February.

Besides surplus capital transfer, the government is expecting Rs 90,000 crore dividend from the RBI in the current financial year as against Rs 68,000 crore received last fiscal.

When asked about presenting the report to the RBI, the sources said that after editing, the date will be sought for submission.

The ECF panel was mandated to submit its report to the RBI within 90 days of its first meeting, which took place on January 8. Following this, the panel was given a three-month extension.

There were some differences of opinion from the government side, the sources said after the conclusion of the meeting.

The other key members of the committee include Rakesh Mohan, former deputy governor of the RBI, as vice-chairman; Finance Secretary Subhash Chandra Garg; RBI deputy governor N.S. Vishwanathan; and two RBI central board members - Bharat Doshi and Sudhir Mankad.

The government and the RBI under previous governor Urjit Patel had been at loggerheads over the Rs 9 lakh crore surplus capital with the central bank.

The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by the RBI is well above the global norm of around 14 per cent. Following this, the RBI board in its meeting on November 19, 2018, decided to constitute a panel to examine the ECF.

In the past, the issue of the ideal size of the RBI reserves was examined by three committees - V. Subrahmanyam in 1997, Usha Thorat in 2004 and Y.H. Malegam in 2013.

While the Subrahmanyam panel recommended for building a 12 per cent contingency reserve, the Thorat panel suggested it should be maintained at a higher 18 per cent of the total assets of the central bank.

The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam committee.

The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually, but did not ascribe any particular number.