Why in news?

• The Central Board of RBI in consultation with the Govt. of India has constituted an Expert Committee to review the extant Economic Capital Framework of the RBI.

Economic Capital Framework Committee and mandate:

• The RBI has named former RBI governor, Bimal Jalan to head the Framework committee.
• Expert committee on economic capital framework will have to give its report within 90 days from its first meeting.
• Review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI.
•   Review global best practices followed by the central banks in making assessment and provisions for risks which central bank balance sheets are subject to.
• To suggest an adequate level of risk provisioning that the RBI needs to maintain.
• To determine whether the RBI is holding provisions, reserves and buffers in surplus / deficit of the required level of such provisions, reserves and buffers.
• To propose a suitable profits distribution policy taking into account all the likely situations of the RBI, including the situations of holding more provisions than required and the RBI holding less provisions than required.
• Any other related matter including treatment of surplus reserves, created out of realised gains, if determined to be held.