While speculations are rife about his exit, Reserve Bank of India (RBI) Governor Urjit Patel has called an emergency meeting of the RBI Board on November 19 to discuss the central bank's ongoing tiff with the finance ministry. The issue came out in the open after a statement by his confidant and Deputy Governor Viral Acharya warning the government against curbing the independence of the central bank. This ruffled feathers in North Block. On Tuesday, Finance Minister Arun Jaitley retaliated saying the RBI had failed to halt the excessive bank lending between 2008 and 2014 which eventually led to a surge in non-performing assets in the banking system.

An RBI board member told BT that the meeting will discuss all issues which are creating a rift between the government and the RBI. The board has government nominees as well; recently, the government had nominated three independent directors who are close to the RSS.

Meanwhile, two top finance ministry officials confirmed that instructions were issued to the RBI in three different cases under the RBI Act's special provisions under which the central bank has no option but to toe the government line. These provisions empower the Union government to issue instructions, as it may consider necessary in public interest, after consultation with the governor. There provisions have never been used before in 84 years of RBI history. The instructions related to reinitiating discussions on reclassification of non-performing assets in case of power plants, easing of the prompt corrective action, or PCA, framework, providing liquidity to non-banking finance companies, or NBFCs, and directing the central bank to transfer dividend of Rs 50,000 crore (63 per cent more than in the previous financial year) to the central government.

Though Viral Acharya, in his speech, had batted for central bank autonomy, finance ministry officials said the autonomy of the RBI is within the framework of the RBI Act and is not absolute.

In the last nine months, the RBI had had a run in with several ministries such as the power and renewable energy ministry, the MSME ministry as well as the Department of Industries over issues. The BJP's ideological parent, the RSS, is also upset with the RBI over its reluctance to ease capital adequacy norms for public sector banks, bring some of them out of the PCA framework, lend to MSMEs and help NBFCs tide over their current crisis with a special liquidity window. They believe the RBI is squeezing the appetite of SMEs to take debt and this impacting their growth.