Jalan Panel On RBI Reserves To Consult Central Bank After Garg’s Abrupt Exit

A panel tasked to review the Reserve Bank of India’s economic capital framework may consult the central bank on the future course of action after the abrupt exit of Subhash Chandra Garg, the government’s lone representative, from the Finance Ministry, a person aware of the matter said.

The Bimal Jalan-headed panel would seek guidance of the Reserve Bank of India on whether another meeting is required, and if there is a need to induct a new member, the person said on the condition of anonymity. The panel finalised its report on July 17 but is yet to submit the findings to the RBI.

Garg was removed as the finance and economic affairs secretary and named the power secretary last evening. Bloomberg reported citing unnamed people that he has sought early retirement after being transferred out abruptly.

Garg was the only government nominee on the panel. Besides former RBI Governor Jalan, the committee also comprises Rakesh Mohan, former deputy governor of the RBI; Bharat Doshi and Sudhir Mankad, both central board members; and NS Vishwanathan, RBI deputy governor.

BloombergQuint reported earlier that the panel’s interim report suggested a 'transferable surplus’— the amount the central bank could potentially pass on to the government—as close to Rs 8,000 crore. That led to a delay in submitting the report because of disagreement among members. The panel met again and decided to transfer an undisclosed amount to the government in three to five tranches. Despite that, Garg is said to have written a dissent note.

Ambiguity remains if the dissent note would be part of the report subject to a new member being appointed. A panel member had earlier told BloombergQuint that Garg’s note will be included.