Question

Which fund constituted under the RBI Act is used by the RBI for absorbing valuation losses and contingencies?

Q: Answer-Which fund constituted under the RBI Act is used by the RBI for absorbing valuation losses and conti...

The Reserve Bank maintains a Contingency Fund and related buffers such as the Contingency Risk Buffer to absorb unexpected losses, including those arising from monetary policy operations, exchange rate movements and other risks. The appropriate size of these reserves was examined by the Bimal Jalan Committee. These buffers protect the financial resilience of the central bank. The balance after provisioning is what becomes available for transfer to the government as surplus.