RBI's wider risk buffer range aimed at flexibility in times of uncertainty

RBI revises CRB range to 4.5-7.5% under updated ECF, giving it flexibility to manage surplus transfers and avoid large fiscal shocks in volatile conditions

The central bank’s revised economic capital framework (ECF) is intended to give the regulator greater flexibility to smooth surplus transfers to the government in a way that does not impact its (the government’s) fiscal maths in a given year, according to experts.

 

The framework expanded the range of the contingency risk buffer (CRB) to 4.5-7.5 per cent.

 

The Reserve Bank of India’s (RBI’s) central board last week approved a record ₹2.69 trillion surplus transfer to the government for 2024-25 even after maintaining the CRB at 7.5 per cent — the upper end of the revised range it approved following a