The Reserve Bank of India (RBI) pulled off a classic stunt getting banks to link loan and deposit rates to an external benchmark without explicitly saying so.
Subbarao said he would be 'ok' if a sovereign bond issue in foreign currency is done once just to test the waters, but cautioned against using the instrument regularly.
Patel, known for not mincing his words, said there are no short cuts, and that sweeping the problem under the carpet won’t work.
Patel said that while banks did indulge in over-lending, the government did not "fully play" its role, and also conceded that the regulator should have acted earlier.
The wrath of markets awaits governments that don't respect the institution's independence, outgoing Deputy Governor Viral Acharya warned in October.
According to finance ministry officials, the government sought a large share of the reserves to meet the fiscal deficit target.
Relaxation of the prompt corrective measures was one of the reasons behind the ugly fight between the Finance Ministry and the RBI under Urjit Patel.
A wider fiscal deficit is generally seen as a concern for RBI because of its inflationary impact.
The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by RBI is well above the global norm of around 14 per cent.
Patel resigned in December from his post citing "personal reasons" amidst reports of a rift between the RBI and the government.
India continued to be the fastest growing big economy during 2018 with its GDP rising at above 7 per cent, after having slipped to 6.7 per cent in the previous financial year.
It will also send a bad signal to global markets just as Raghuram Rajan's exit did," the former Union Minister told PTI here.
The assorted technocrats, economists and bureaucrats had fundamental disagreements during a stormy meeting held 27 days ago, which stretched beyond nine hours and ended inconclusively.
Jaitley said that external factors such as policies adopted by the US, trade war and crude oil prices were impacting economies like India, despite “strong fundamentals”.
Last month, the Parliamentary Standing Committee on Finance met finance ministry officials to respond to queries on recent bank frauds and mounting NPAs.