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The Centre is unlikely to issue any direction under Section 7 to the RBI that goes against the majority decision of the board of the banking regulator, ET Now learns from senior officials of the Narendra Modi government.
In fact, sources add, if any instructions are issued at all, it maybe to ensure the RBI Governor accepts and implements the majority decision of the board.
The next RBI board meet is scheduled for November 19, and the Centre is believed to be confident of most members pressing for action to boost liquidity.
Sources say the likely action being conceived under Section 7 follows the Prime Minister's Office being debriefed on the abrupt adjournment of the last RBI board meet on October 23.
Sources add that despite the majority of the members being in favour of taking action to boost liquidity, the meeting was adjourned abruptly and hence no resolutions could be passed.
Liquidity is at the heart of the battle between the government and RBI.
While the Reserve Bank of India Governor is of the view there is ample liquidity, the government has a diametrically opposite view.
The government opines its the banks that are having to continuously prevent defaults of NBFCs at the cost of lending, and senior officials point out credit offtake has fallen nearly 80% from recent highs.
