At the height of the global financial crisis in 2008 when liquidity crunch hit the Indian credit market, the then finance minister P. Chidambaram constituted a liquidity management committee headed by the then finance secretary Arun Ramanathan. The decision raised eyebrows as liquidity management is a key function of the RBI. (One of the meetings of that committee was held in the head office of a public sector bank in Bandra-Kurla Complex in Mumbai.).An ‘annoyed and upset’ Duvvuri Subbarao, the then governor of RBI, called up the finance minister to say that he would not participate in the meeting. Mr. Subbarao himself penned the incident down in his memoir — Who Moved My Interest Rate – Leading the Reserve Bank of India through Five Turbulent Years.
