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Why RBI’s Revaluation Reserves Cannot be transferred to Government

01-Apr-2019V K Sharma

Liabilities on the RBI’s balance sheet comprise what are known as ‘Monetary‘ and ‘Non Monetary‘ liabilities. Monetary liabilities are created when the RBI , like any central bank, buys assets as part of its exchange rate and monetary policy objectives , and credits the accounts of banks maintained with it. Part of these credit balances can be exchanged for currency notes. These monetary liabilities of the RBI, including the currency in circulation, are also referred to as high powered Base/Reserve Money and a multiple of which creates what is known as Broad Money ( M3 ). Non Monetary liabilities comprise capital and reserves consisting of credit balances, also referred to as Revaluation Reserves , in Currency and Gold Revaluation Account (CGRA), Investment Revaluation Account-Foreign Securities, Investment Revaluation Account-Rupee Securities ,Contingency Fund and Asset Development Fund.

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