The Reserve Bank of India (RBI) said on Tuesday its central board had decided to create a separate supervisory and regulatory cadre within the bank after reviewing the current supervisory structure. The board also reviewed the current economic situation, global and domestic challenges and various areas of operations of the central bank, along with the medium-term strategy document covering the RBI's Mission Statement and the Vision Statement.

The central bank was expected to discuss various options for better regulation of non-banking financial companies following large-scale defaults by IL&FS last year, which have caused the on-going liquidity crunch in the banking system.

The board reviewed the present structure of supervision in the RBI in the context of growing diversity, complexities and interconnectedness within the financial sector, the RBI said in a statement after a two-day central board meet in Chennai.

"With a view to strengthening the supervision and regulation of commercial banks, urban cooperative banks and Non-Banking Financial Companies, the Board decided to create a specialised supervisory and regulatory cadre within the RBI," said the central bank.

Analysts had expected the board to announce an asset quality review (AQR) of NBFCs like it had done for commercial banks, to gauge the extent of problems at the so-called shadow banks.

Issues in currency management and banker to government functions of the RBI were also discussed.

The central bank has been conducting FX swap auctions to infuse durable rupee liquidity into the banking system while also conducting open market purchase of debt securities.

The RBI's board meetings have come under the spotlight in recent months since the government started putting pressure on the central bank to ease lending curbs and hand over more of its reserves to fund the country's fiscal deficit late last year.

The central bank in late December had constituted the Jalan Committee under the chairmanship of former RBI governor Bimal Jalan to review the economic capital framework of the RBI.

The committee was to review the status, need and justification of various provisions, reserves and buffers presently provided by the RBI. The report is expected to be sent to the RBI in June and would be adopted after it is reviewed by the central board.