Contingency Funds of RBI – UPSC Prelims

RBI’s risk provision accounts: The RBI’s main risk provision accounts are-:
  • Contingency Fund(CF): 
    • This is a specific provision meant for meeting unexpected and unforeseen contingencies including:
    • Depreciation in the value of securities,
    • Risks arising out of monetary/exchange rate policy operations,
    • Systemic risks and any risk arising on account of the special responsibilities enjoined upon the Reserve Bank.
  • Currency and Gold Revaluation Account(CGRA):
    • It is maintained by the Reserve Bank to take care of currency risk, interest rate risk and movement in gold prices.
    • CGRA provides a buffer against exchange rate/ gold price fluctuations. It can come under pressure if there is an appreciation of the rupee vis-à-vis major currencies or a fall in the price of gold.
  • Investment Revaluation Account Foreign Securities(IRA-FS):
    • The unrealized gains or losses on revaluation in foreign dated securities are recorded in the IRA-FS account.
  • Investment Revaluation Account-Rupee Securities(IRA-RS):
    • The unrealized gains or losses on revaluation is accounted for in Investment Revaluation Account-Rupee Securities(IRA-RS).

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