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Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu on Friday (November 14) detailed the central bank’s accounting framework and highlighted the need for stronger capital buffers, consistent valuation practices and transparent disclosures across global central banks.
Speaking at the first International Conference on Central Bank Accounting Practices, organised by the RBI and the SEACEN Centre, Murmu said central banks worldwide operate with varied mandates and accounting frameworks, and the absence of a common global standard has led to significant differences in the way balance sheets are reported.
RBI position and accounting framework
Murmu said the RBI operates under the provisions of the RBI Act, 1934 and the RBI General Regulations, 1949, which govern its financial statements and surplus distribution. He said the central bank follows conservative valuation norms, including daily mark-to-market of the entire foreign exchange reserves and weekly valuation of domestic securities.
Unrealised gains from revaluation are not recognised as income, while unrealised losses on domestic and foreign securities are charged to the Contingency Fund at year-end.
Revaluation accounts for investments, foreign currency assets and gold are maintained separately, with no fungibility between them.
He said the RBI maintains realised equity of 7.5% of its balance sheet and revaluation balances of 17.4%, resulting in total economic capital of about 25%.
Surplus distribution and risk buffers
The Deputy Governor said the RBI follows a rule-based surplus distribution framework under the Economic Capital Framework (ECF) adopted in 2018–19, based on the recommendations of an external committee. The ECF, he noted, was reviewed internally in 2025 to enhance risk-assessment granularity. Surplus is transferred to the government after meeting provisioning requirements for monetary, financial, credit and operational risks.
Global variations and emerging issues
Murmu noted that central banks across jurisdictions differ widely in how they revalue portfolios, treat unrealised gains and losses, use amortised cost, and maintain risk buffers. He said the conference aims to enable greater exchange of information on practices that may improve transparency, within country-specific legal frameworks.
He also highlighted emerging issues that could influence central bank balance sheets, including sharp movements in global gold prices and the potential impact of Central Bank Digital Currencies (CBDCs). He said design choices for CBDCs could affect public behaviour and alter the structure of liabilities on central bank balance sheets, an area of active international research.
Speaking at the first International Conference on Central Bank Accounting Practices, organised by the RBI and the SEACEN Centre, Murmu said central banks worldwide operate with varied mandates and accounting frameworks, and the absence of a common global standard has led to significant differences in the way balance sheets are reported.
RBI position and accounting framework
Murmu said the RBI operates under the provisions of the RBI Act, 1934 and the RBI General Regulations, 1949, which govern its financial statements and surplus distribution. He said the central bank follows conservative valuation norms, including daily mark-to-market of the entire foreign exchange reserves and weekly valuation of domestic securities.
Unrealised gains from revaluation are not recognised as income, while unrealised losses on domestic and foreign securities are charged to the Contingency Fund at year-end.
Revaluation accounts for investments, foreign currency assets and gold are maintained separately, with no fungibility between them.
He said the RBI maintains realised equity of 7.5% of its balance sheet and revaluation balances of 17.4%, resulting in total economic capital of about 25%.
Surplus distribution and risk buffers
The Deputy Governor said the RBI follows a rule-based surplus distribution framework under the Economic Capital Framework (ECF) adopted in 2018–19, based on the recommendations of an external committee. The ECF, he noted, was reviewed internally in 2025 to enhance risk-assessment granularity. Surplus is transferred to the government after meeting provisioning requirements for monetary, financial, credit and operational risks.
Global variations and emerging issues
Murmu noted that central banks across jurisdictions differ widely in how they revalue portfolios, treat unrealised gains and losses, use amortised cost, and maintain risk buffers. He said the conference aims to enable greater exchange of information on practices that may improve transparency, within country-specific legal frameworks.
He also highlighted emerging issues that could influence central bank balance sheets, including sharp movements in global gold prices and the potential impact of Central Bank Digital Currencies (CBDCs). He said design choices for CBDCs could affect public behaviour and alter the structure of liabilities on central bank balance sheets, an area of active international research.
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