The RBI told the government that there was no liquidity crunch at NBFCs and that there was actually some credit growth in the sector. The RBI said inflation was under control and that it had taken no measure to tighten liquidity in the system, government sources said.

The issue came up for discussion at the Financial Stability and Development Council (FSDC) meeting chaired by Finance Minister Arun Jaitley.

Apart from senior officials of finance and corporate affairs ministries, the meeting was attended by chiefs of financial sector regulators - the RBI, Securities and Exchange Board of India, Pension Fund Regulatory and Development Authority, Insurance Regulatory and Development Authority of India and Insolvency and Bankruptcy Board of India.

"The RBI indicated that they are monitoring the situation but do not see any liquidity crunch in NBFCs in general, except in some sectors. In fact, there has been credit growth in the NBFC sector... Jaitley then asked the Financial Services Department to share data on credit issues being faced by NBFCs with the central bank," a government source said.

The Council reviewed the current global and domestic economic situation and financial sector performance. It discussed at length the issue of real interest rate, current liquidity situation, including segmental liquidity position in NBFCs and mutual fund space.

"The Council decided that the regulators and the government would keep a close watch on the developing situation and take all necessary measures," the Finance Ministry said in a statement.

The RBI also underlined that the $75-billion currency swap agreement with Japan announced on Monday would provide additional resources to the country.

The members took note of the progress in strengthening the cyber security in financial sector including the plans to set up a Computer Emergency Response Team in the Financial Sector (CERT-Fin) under a Statutory Framework.

"The Council also deliberated on the need for identifying and securing critical information infrastructure in financial sector," the ministry said.

The meeting also discussed the issues related to crypto assets and currency.

Economic Affairs Secretray Subhash Chandra Garg briefed on the deliberations to devise an appropriate legal framework to ban use of private crypto currencies in India and encouraging the use of distributed ledger technology, as announced in the Budget 2018-19.

Other issues discussed include market developments and financial stability implications of the use of RegTech and SupTech by financial firms and regulatory and supervisory authorities, and implementing the recommendations of the Sumit Bose Committee Report on measures, such as, promoting appropriate disclosure regime for financial distribution costs.

The FSDC meeting was the first instance when RBI Governor Urjit Patel came face to face with Jaitley following the recent criticism by RBI Deputy Governor Viral Acharya of government interference in the functioning of the central bank.

Acharya had on October 26 pitched for autonomy in the banking regulator's functioning, warning that the market could make the government pay for eroding the central bank's independence.

On Tuesday, the Finance Minister held the central bank responsible for the mountain of bad loans in the nation's banking system.