RBI governor Urjit Patel and PM Narendra Modi discussed possible solutions to contentious issues.

NEW DELHI: Reserve Bank of India governor Urjit Patel met Prime Minister Narendra Modi last week to discuss possible solutions to contentious issues which have caused a rift that has spilt into the public domain.

The meeting came after weeks of friction over the RBI 's differences with the government over the quantum of reserves that need to be maintained, NPA norms, insolvency proceedings against power companies and interest rates which triggered a heated discussion over the central bank's powers and autonomy.

Patel is also understood to have had discussions with finance minister Arun Jaitley .

His meetings suggest that communication lines between the central bank and the government have not snapped, though that may not necessarily lead to a resolution of the standoff. Sources said the two sides never stopped talking.

The simmering tension became the subject of public discussion after RBI deputy governor Viral Acharya raised concerns during a speech over the independence of the central bank and suggested that the government was more driven by political and electoral considerations.

Acharya defended the tighter norms the RBI had imposed on weak banks which the government viewed to be too harsh and feared that it would hit credit flow in the economy.

The size of the reserves and a possible transfer to the government was another matter of contention with the government arguing that the RBI had not shared its viewpoint on what the quantum of reserves should be.

