The board of the Reserve Bank of India (RBI) said on Friday it had deliberated on the central bank's governance framework and decided the matter requires "further examination".
The governance issue was a key part of the board meeting's agenda as the government wanted to have a greater say in the bank's regulatory decisions through its board nominees.
The meeting, which wrapped up in less than four hours on Friday, compared with the previous two meetings that lasted nine hours, indicated a likely smoother ride ahead for the central bank and the government under new RBI Governor Shaktikanta Das.
"The board deliberated on the governance framework of the Reserve Bank and it was decided that the matter required further examination," the RBI said in a statement.
The governance agenda included re-constituting or reviewing the sub-committees of the board which make regulatory decisions, in a bid to curb the RBI's unilateral decision-making powers.
Currently, the RBI decides the regulatory and operational issues of banks and the board is informed later.
Das, who took charge on Wednesday, sought more time from the board to go through actual data before deciding on the need for more steps on government demands, including further liquidity for weak shadow banks, easy lending rules and a greater share in the RBI's excess reserves, a source at the meeting said.
"He assured that decisions would be taken based on ground level data and discussion with all stakeholders," said the source, who declined to be identified.
It was mostly pending administrative issues, including the design of currency notes, that were discussed, the source said.
Das, who has emphasised being consultative since he walked into the RBI in Mumbai, also assured board members of more involvement of the central bank's regional boards, the source said.
Das' bureaucratic links are expected to heal a rift between the government and the central bank that had widened sharply under his predecessor, Urjit Patel, but the pressure to have greater control over the RBI's regulatory power through the board is likely to continue.
The board also reviewed global and domestic challenges, liquidity and credit delivery and currency management, the RBI said in the release without giving details.
There were some expectations that the RBI might come up with measures to ease liquidity further following the government's demands.
Prime Minister Narendra Modi's government is keen to boost the economy ahead of general elections that must be held by May.
Modi's ruling Hindu nationalist Bharatiya Janata Party's need for support from the RBI has become more imperative after the government lost five state elections, relinquishing power in three of them, in results announced this week.
Defending the government's demands, Finance Minister Arun Jaitley told ET Now on Thursday there was a need to boost credit and liquidity, and bringing up these issues with the central bank did not mean it was infringing upon the RBI's autonomy.
"RBI and government's difference has to be respected," Jaitley told ET Now on Thursday.
The pressure deepened a rift between the RBI and government, which eventually led to Patel's shock resignation this week.
However, Das, who has been a bureaucrat for nearly four decades, is deft at building consensus and has promised to be more consultative, in contrast to Patel's taciturn nature and his unwillingness to engage often with stakeholders.