NEW DELHI: RBI is one of the highly capitalised central banks of the world and the government can redeploy some of its capital for fund infusion in state-owned banks and setting up a public sector asset reconstruction company, Economic Survey 2016-17 said. Observing that there is no particular reason why this extra capital should be kept with the RBI, it said it is one of the most highly capitalised central banks in the world. "Assuming that the RBI returns Rs 4 lakh crore of capital to the government, what are the uses to which this capital can be put? It could be used in several good ways...first for recapitalizing the banks and/or recapitalizing a Public Sector Asset Rehabilitation Agency (PARA)," it said. Second, for extinguishing debt to demonstrate that the government is serious about a strong public sector fiscal position.

Source: Economic Times January 31, 2017 14:55 UTC