Modi govt trying to capture RBI could be catastrophic: Chidambaram

Government’s fiscal math on track, don’t need cash from RBI: Finance ministry

Centre has not sought Rs 3.6 lakh crore from RBI, clarifies senior finance ministry official

The statement from North Block comes ahead of the RBI's November 19 board meet, which is expected to take up the unfinished agenda of last month's meeting that had ended in a stalemate.

Malegam was on the RBI board for 17 years and has chaired several committees for the central bank.

Kolkata: Senior Congress leader P Chidambaram on Thursday accused the Narendra Modi government of trying to "capture" the Reserve Bank of India to tide over its fiscal crisis, warning that any such move would be "catastrophic".

"If the RBI either defies the government or the RBI governor resigns, in either events, the outcome will be catastrophic", he said.

The Economic Affairs Secretary Subhash Chandra Garg on Friday refuted reports of a Finance Ministry proposal asking the Reserve Bank of India to transfer 3.6 lakh crore to the government saying that these were misinformed speculation in the media, and the government's finances were right on track. As of June 2018, the total amount in these three types of reserves exceeded ₹9 trillion with more than ₹6.9 trillion in valuation reserves, RBI's annual accounts show. The phrase "appropriate economic capital framework" is being interpreted to mean "determining the norms for surplus reserve to be maintained".

There have been reports that the Centre has already thrice asked the RBI to transfer Rs 3.6 lakh crore from its reserves. "There is no proposal to ask RBI to transfer Rs 3.6 or 1 lakh crore, as speculated", Garg said, adding that the only proposal being discussed by the government and central bank pertained to fixing an appropriate economic capital framework of the RBI.

Section 7 of the RBI Act gives special powers to the government to issue directions to the RBI governor on issues of public interest. This includes balances in Contingency Fund, Asset Development Fund (ADF), Currency and Gold Revaluation Account (CGRA), Foreign Exchange Forward Contracts Valuation Account (FCVA) and Investment Revaluation Account Rupee Securities (IRA-RS), besides some minor accounts head.

He added that it would be hard to quantify a percentage amount for how much of RBI's profits should be transferred to its reserves.

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