{"id":96410,"date":"2026-04-03T16:55:37","date_gmt":"2026-04-03T11:25:37","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=96410"},"modified":"2026-04-03T16:55:37","modified_gmt":"2026-04-03T11:25:37","slug":"bimal-jalan-committee","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/bimal-jalan-committee\/","title":{"rendered":"Bimal Jalan Committee, Objectives, Key Recommendations"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Bimal Jalan Committee on Economic Capital Framework was set up in 2018 by the Reserve Bank of India in consultation with the Government of India. The committee was chaired by Bimal Jalan, a former RBI Governor.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The main purpose of this committee was to review how much capital the RBI should keep as reserves and how much surplus it can safely transfer to the government. The committee submitted its report in 2019, which became an important step in strengthening India\u2019s financial stability framework.<\/span><\/p>\n<h2><b>Bimal Jalan Committee Objectives<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The Bimal Jalan Committee was formed with several key objectives:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To review the existing capital framework of the <strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/reserve-bank-of-india\/\" target=\"_blank\">RBI<\/a><\/strong><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To determine the ideal level of reserves the RBI should maintain<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To ensure financial stability and risk protection<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To create a transparent and rule-based system for surplus distribution<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To align RBI practices with global central banking standards<\/span><\/li>\n<\/ul>\n<h2><b>Bimal Jalan Committee Recommendations<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The committee recommended that the <\/span><b><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/consolidated-fund-of-india\/\" target=\"_blank\">Contingency Fund<\/a> (CF)<\/b><span style=\"font-weight: 400;\"> should be maintained between <\/span><b>5.5% to 6.5%<\/b><span style=\"font-weight: 400;\"> of the RBI\u2019s balance sheet to ensure adequate risk coverage during financial crises.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It advised that only <\/span><b>realized profits (actual earnings)<\/b><span style=\"font-weight: 400;\"> should be transferred to the government, while <\/span><b>unrealized gains (like revaluation reserves)<\/b><span style=\"font-weight: 400;\"> should not be distributed as they are not actual income.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The committee suggested a <\/span><b>clear surplus distribution policy<\/b><span style=\"font-weight: 400;\">, making the transfer process more transparent, rule-based, and less discretionary.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It recommended that the <\/span><b>Economic Capital Framework should be reviewed every five years<\/b><span style=\"font-weight: 400;\"> to keep it updated with changing economic conditions and global financial risks.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI should <\/span><b>allow interim dividends only in exceptional situations<\/b><span style=\"font-weight: 400;\">, avoiding frequent or unnecessary payouts that may weaken its financial position.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The committee proposed <\/span><b>aligning the RBI\u2019s financial year with the government\u2019s fiscal year<\/b><span style=\"font-weight: 400;\">, improving coordination in budgeting and economic planning.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It emphasized maintaining a <\/span><b>proper balance between risk provisioning and surplus transfer<\/b><span style=\"font-weight: 400;\">, ensuring that the RBI remains financially strong while supporting the economy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The recommendations also focused on strengthening the RBI\u2019s ability to handle <\/span><b>market risks, credit risks, operational risks, and currency fluctuations<\/b><span style=\"font-weight: 400;\"> effectively.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Overall, the committee aimed to create a <\/span><b>robust, transparent, and internationally aligned framework<\/b><span style=\"font-weight: 400;\"> for managing the RBI\u2019s capital and reserves.<\/span><\/li>\n<\/ul>\n<h2><b>About the Economic Capital Framework (ECF)<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The <strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/economic-capital-framework-ecf\/\" target=\"_blank\">Economic Capital Framework<\/a><\/strong> (ECF) refers to the system used by the RBI to manage its capital, reserves, and risk buffers. It ensures that the central bank remains financially strong even during economic crises.<\/span><\/p>\n<p><b>Economic capital includes:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Realized Equity:<\/b><span style=\"font-weight: 400;\"> Profits that have already been earned and can be distributed.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Unrealized Reserves (Revaluation Balances): <\/b><span style=\"font-weight: 400;\">Gains or losses due to changes in currency value, gold prices, or foreign assets. These are not actual cash profits but accounting values.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This framework helps the RBI balance two important goals:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Supporting the government financially<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maintaining its own financial safety<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Bimal Jalan Committee (2019) reviewed RBI\u2019s Economic Capital Framework, recommending reserve levels, surplus transfer rules, and measures to ensure financial stability.<\/p>\n","protected":false},"author":25,"featured_media":96414,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[786],"tags":[6582,6583],"class_list":{"0":"post-96410","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-general-studies","8":"tag-bimal-jalan-committee","9":"tag-economic-capital-framework","10":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/96410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=96410"}],"version-history":[{"count":2,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/96410\/revisions"}],"predecessor-version":[{"id":96421,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/96410\/revisions\/96421"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/96414"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=96410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=96410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=96410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}