Reserve Bank of India (RBI) Governor Raghuram Rajan had reportedly rejected the recommendation of most of the members of technical advisory panel for a rate cut in the August policy review meeting.

Four of the seven members in the panel had recommended a cut in repo rate in August amid easing inflation and slowing economic activity in the country.

One of the members even suggested a cut in the repo rate by as much as 50 basis points, while the others proposed 25bps cut, Reuters reported citing the RBI's statement.

But, the central bank governor kept policy rates unchanged on 4 August, rejecting the rate cut recommended by a majority in the panel.

Under the existing mechanism, the RBI governor consults a technical advisory panel before deciding on key policy rates, while having the discretion to accept or reject the recommendations of the panel.

However, a revised draft of Indian Financial Code (IFC) released last month contained a proposal to scrap RBI governor's veto power in deciding interest rates. The proposal also indicated the widening rift between the government and the central bank governor.

The draft has a proposal for including four representatives from the government in the "all-powerful committee" and only three from the RBI. The three representatives from the central bank also include RBI chairperson, which too is being read differently.

Stepping up the pressure on the RBI to cut rates, Finance Minister Arun Jaitley had said last week that "hopefully, the impact of inflation being under control is a factor which ... the central bank, with all its wisdom, will take note of".

In the wake of growing calls for rate cuts, Rajan had said on Monday that "rate cuts should not be seen as goodies that the RBI gives out stingily after much public pleading".