A panel named by India’s central bank to study its capital structure is likely to identify excess reserves of up to ₹ 3 lakh crore ($43 billion), or 1.5 percent of gross domestic product, according to Bank of America Merrill Lynch.

The view from BofAML lends itself to a debate over Reserve Bank of Indias reserves, with one school of thought believing that the monetary authority holds surplus capital that can be handed over to the government and the other saying the RBI has insufficient reserves.

BofAMLs note comes as the panel led by former central bank Governor Bimal Jalan prepares to submit its report in the coming weeks. While finance ministry officials have supported transfer of surplus reserves to help the government meet budget goals, a central bank-backed thinktank found that the RBI’s capital buffer that’s below the global average capital to asset ratio.

Our stress tests throw up a range of one trillion rupees plus only from contingency reserves,” Indranil Sen Gupta, chief India economist at BofAML, said in the note. According to him, India’s central bank maintains higher contingency reserves as a percentage of its total book compared to its peers in Brazil, Russia and South Africa and a lower cap will release more funds.

As such, if the cap is halved to 3.25 percent from 6.25 percent, currently, that will release ₹ 1.3 lakh crore, Sen Gupta added.

Along with revaluation gains which range from ₹ 300 crore to ₹ 1.8 lakh crore , India’ss central bank would be in a position to transfer the excess reserves to the government which can be used to recapitalize the country’s struggling state-run banks, he said.

India’s central bank books revaluation gains on the foreign currency assets and gold holdings. Those holdings are currently just above $400 billion.

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