The Centre was asked to undergo consultations regarding Section 7 of the Reserve Bank of India Act after the central bank failed to act on any of the demands placed by the government, The Economic Times reported.
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The two authorities have been discussing easing liquidity and promoting credit offtake, sources told ET. However, no positive response was received from RBI, the sources said, implying that the regulator’s refusal to accept the government's views provoked the impasse and that the Centre was prepared to stand its ground.
“We have been engaged with the RBI on many of them for a year or more. RBI could have accepted four or five of these proposals, and said no to the others,” said an official. “It has not acted on any of them. It has not even taken them to its board. What choice did the government have?”
The issues between the two authorities include a special window for non-banking finance companies (NBFCs), housing finance companies and mutual funds, among others.