"RBI has constant consultation with Finance Ministry. This meeting was part of that. We discussed the whole gambit of issues," he told reporters after meeting Chidambaram. (Agencies)
Sources said during his meeting with the Prime Minister, the Governor discussed the state of the economy and steps required to address the current slowdown and high inflation.
Rajan, who was Chief Economic Advisor in the Finance Ministry before taking over as RBI Governor on September 4, is scheduled to announce the mid-quarter monetary policy review on September 20.
All eyes are on the policy announcement considering the inflation climbing to six months high of 6.1 percent in August, concerns on depreciating rupee and slowing growth.
High inflation offers Rajan limited scope to cut key rates as demanded by industry. Soon after being named for the new assignment, Rajan had said there was no "magic wand" to pull the economy instantly out of challenges it faces.
"We have recommended a cut in CRR, repo rate and asked RBI not to restrict the MSF (marginal standing facility) to a particular number...," State Bank of India (SBI) Chairman
Pratip Chaudhuri said.
As the peak festival season is around the corner, bankers are pressing for a cut in cash reserve ratio and policy rates by the Reserve Bank to boost demand for manufactured goods and revive sagging economic growth.
Demand for loans are expected to go up in the ensuing festive season and banks would be able to disburse loans at the lower rate if RBI cuts rate, Indian Overseas Bank Chairman and Managing Director M Narendra said.
In its last policy review on July 29, RBI chose to keep all key interest rates unchanged on account of weak rupee. Markets have given thumbs up to Rajan's road map to revive the economy, with the rupee coming off its record low.
"RBI has constant consultation with Finance Ministry. This meeting was part of that. We discussed the whole gambit of issues," he told reporters after meeting Chidambaram.