Date: June 16th 2008

PIL filed against RBI by Pune resident. Alleges that RBI lost Rs. 65,065 crore in 2006-07 on the valuation of investments related to market stabilization scheme.

Mumbai: A Pune resident has filed a public interest litigation (PIL) alleging that the Reserve Bank of India lost Rs. 65,065 crore in 2006-07 due to fall in its valuation of investments in foreign exchange.

Petitioner R.S.Kelkar said that RBI has not taken this loss to its profit and loss account and the centre is also not accounting this loss in its accounts presented to the Parliament.

The loss is mentioned in the currency and gold revaluation account in RBI’s Balance-Sheet. It is on the valuation of investment done by the RBI from the proceeds of market stabilization scheme (MSS).

The MWS Bonds were also issued illegally and unconstitutionally, the PIL claims the RBI borrowed a sum of Rs. 1,61,058 crores by virtue of MSS bonds till January 2008 this year. The Petition demands that this account lying with the RBI in a separate identifiable cash account, be transferred to the consolidated fund of India.

These bonds were issued after an Capital MOU was signed by the centre and the RBI in March 2004 without informing Parliament, the PIL said.

Ironically, the country is paying interest on this amount at 7.5% p.a. and the proceeds are being invested in foreign exchange, especially in US Treasury, yielding almost no returns.

Over and above this loss of interest the country has also suffered this loss of more than Rs. 65065 crores on valuation, according to the PIL. The Petition also said the Comptroller and Auditor General of India should audit RBI accounts and file a report to the President who can put it before both the Houses of Parliament. The PIL also sought a stay on the MOU and on issuance of fresh MSS Bonds.
Chief Justice Swatanter Kumar and Justice V.M. Kanade of the Bombay High Court heard the matter on Thursday and adjourned it for two weeks as the RBI sought time to file its version.

The aim is MSS is to drain out excess liquidity. Under the scheme, the treasury Bills are auctioned. The Central Government in consultation with the RBI, fixes the amount to be collected through the auctions. The auctions are done periodically.