The board of RBI in its meeting on November 19 had decided to constitute the panel.

The RBI Wednesday named former governor Bimal Jalan as the head of the expert panel that will decide on the appropriate size of reserves that the central bank should maintain and the dividend it should give to the government. Former economic affairs secretary Rakesh Mohan will be the vice chairman. In a statement, the Reserve Bank of India (RBI) said the expert committee will submit its report in 90 days from the first day of its meeting and has been asked to study global practices and suggest if the central bank was holding reserves and buffer capital in surplus of the required.

The government and the RBI under the previous governor Urjit Patel had been at loggerheads over the Rs 9.6 lakh crore surplus capital with the central bank. The Finance Ministry was of the view that the buffer of 28 per cent of gross assets maintained RBI is well above the global norm which is around 14 per cent.

The board of RBI in its meeting on November 19 had decided to constitute the panel but the committee could not be announced as the two sides reportedly differed on the role of Mohan. Urjit Patel, who resigned as RBI Governor recently, was said to have hotly contested the appointment of Mohan.

Patel resigned as RBI governor on December 10 and a day later former economic affairs secretary Shaktikanta Das was named his replacement.

The six-member committee now been constituted also includes Economic Affairs Secretary Subhash Chandra Garg and two members of RBI central board - Bharat Doshi and Sudhir Mankad. RBI deputy governor NS Vishwanathan is the sixth member of the committee.

The Expert Committee would "review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI," it said. It will also "review global best practices followed by the central banks in making assessment and provisions for risks which central bank balance sheets are subject to."

The panel will propose a suitable profits distribution policy taking into account all the likely situations of the RBI, including the situations of holding more provisions than required.

The RBI has also entrusted the panel to suggest an adequate level of risk provisioning that the RBI needs to maintain.

Earlier this month, Finance Minister Arun Jaitley said it does not need money from the RBI to fund fiscal deficit. "My government has the best fiscal record and even this year we will maintain the fiscal deficit. And therefore to maintain fiscal deficit I don't need that kind of money," he had said.

In the past, the issue of the ideal size of RBI's reserves was examined by three committees -- V Subrahmanyam (1997), Usha Thorat (2004) and Y H Malegam (2013).

While the Subrahmanyam committee recommended that contingency reserve should be built up to 12 per cent, the Thorat committee had said the reserve adequacy should be maintained at 18 per cent of the total assets.

The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam panel.

The Malegam committee recommended that adequate amount of profits should continue to be transferred each year to contingency reserves.