Government to transfer IMF special drawing rights to RBI for Rs 15,000 crore

NEW DELHI: The government will transfer the special drawing rights (SDRs) of the International Monetary Fund (IMF) it holds to Reserve Bank of India (RBI) to house all the reserves under the central bank.

In returns, the RBI will pay the government Rs 5,000 crore in the current fiscal and Rs 5,000 crore each in the next two fiscals, which will help the finance ministry meet the revised fiscal deficit target of 4.6% of GDP.

SDR is an international reserve asset created by the IMF in 1969, a kind of alternative international currency to help boost the official reserves of member countries. Each member country has SDRs allocated to it in proportion to its quota in the IMF. Its value is based on a basket of key international currencies - the euro, Japanese yen, pound sterling, and US dollar.

“A decision has been taken to transfer the SDR balances held by the GOI ( Government of India) to the Reserve Bank of India in a phased manner to consolidate the reserve assets and provide the RBI more flexibility in reserve management operations,” RBI said.

“We want RBI to manage all our foreign exchange reserves,” a finance ministry official told ET. The country had total foreign exchange reserves of $293.4 billion on February 21 — $266.9 billion in dollar reserves, $20.1 billion of gold, $4.45 billion of SDRs and $2 billion as reserves with IMF.

The dollar value of SDR is declared every day by IMF. On March 6, one US dollar was worth SDR 0.647268. If required, a member country can exchange its SDR for another country for its currency. For instance, India can sell its SDRs to the UK for British pound.

Alternately, the IMF can ask a country with strong external positions to purchase SDRs from the member wanting to sell. India has a 3.2897 billion SDR allocation.