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    Question

    With reference to the Contingent Risk Buffer (CBR),

    consider the following statements: 1. Reserve Bank of India will transfer Rs 30,307 crore as surplus to the government for 2021-22. 2. It is a form of a loan from government of India for meeting all risks or losses in RBI. 3. RBI, at all times, has to maintain a minimum contingency risk buffer of 7.5%. Which of the statements given above is/are correct?
    A Only 1 Correct Answer Incorrect Answer
    B Only 2 Correct Answer Incorrect Answer
    C Only 3 Correct Answer Incorrect Answer
    D All of these Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    · Revaluation reserves comprise of periodic marked-to-market unrealized/notional gains/losses in values of foreign currencies and gold, foreign securities and rupee securities, and a contingency fund. · It is a form of a contingency fund for meeting all risks or losses primarily built up from retained earnings. It is also called the Contingent Risk Buffer (CBR). · The Reserve Bank of India (RBI) will transfer Rs 30,307 crore as surplus to the government for 2021-22. · The decision was taken after deciding to maintain the contingency risk buffer at 5.50 per cent of its balance sheet. · According to the Bimal Jalan committee’s report, the RBI, at all times, has to maintain a minimum contingency risk buffer of 5.5 per cent. · This year’s transfer is sharply lower than what the central bank had did in the previous financial year — Rs 99,126 crore.

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