The chief of India’s central bank has indicated to a parliamentary panel that the current level of currency reserves it maintains are “necessary”.
Facing a volley of questions from committee members, Urjit Patel is said to have indicated that the Reserve Bank of India (RBI) wants to maintain close to 99 per cent of current reserves to maintain a robust balance sheet and keep the AAA rating — so that if it wants to borrow, it can borrow quickly.
This is the first time Patel has spoken about the issue since a meeting of the RBI’s central board was held on November 19.
At that meeting, the government and the central bank agreed to set up a committee to sort out the contentious issue of transferring surplus reserves within the RBI.
The government and the RBI are to finalise the composition and terms of reference of the committee meant to provide a solution to the dispute.