The Reserve Bank of India’s $5 billion two-year sell/buy swap would help the central bank marginally reduce the size of its balance sheet, improve its dividend-paying capacity, and help manage liquidity and currency positions better, said analysts.
Since the RBI’s economic capital requirement as per the Bimal Jalan committee is linked to the size of assets, any reduction in the balance sheet reduces the need for economic capital, or the resources required to be set aside against possible risks.
