Here are 10 points on this developing story:
Finance Minister Arun Jaitley and RBI governor Urjit Patel came face-to-face at a meeting of a financial stability body amid tension after Mr Patel's deputy made a strong call for autonomy for the central bank in a speech on Friday.
The government asked RBI or the Reserve Bank of India for an assurance that any liquidity crisis faced by non-bank lenders should not have a spillover effect or escalate. The bank reportedly assured that it was keeping a close watch on the financial sector.
Government officials have recently called for the RBI to relax its lending restrictions on some banks. The government has also been trying to trim the RBI's regulatory powers by setting up a new regulator for the country's payments system. The Modi government has also been pushing RBI to part with some of its Rs 3.6 trillion surplus to help bridge the fiscal deficit and finance its welfare programmes.
Mr Patel and his deputy governors are expected to meet top finance ministry officials on Friday.
Urjit Patel, who was appointed for a three-year term, was the first governor of the RBI to be chosen by PM Modi. Before joining the RBI, Urjit Patel was an adviser with The Boston Consulting Group.
Mr Patel was born on October 28, 1963, in Kenya. His grandparents hail from Gujarat. He has worked at the International Monetary Fund (IMF), and was a consultant to the Union Finance Ministry from 1998 to 2001. He also had other assignments in public and private sectors, including with Reliance Industries, IDFC Ltd, MCX Ltd and Gujarat State Petroleum Corporation.
He has worked closely with several central and state government committees. These include the Task Force on Direct Taxes, the High Level Expert Group for Reviewing the Civil & Defence Services Pension System, the Prime Minister's Task Force on Infrastructure, the Group of Ministers on Telecom Matters, the Committee on Civil Aviation Reforms and the Ministry of Power's Expert Group on State Electricity Boards.
He has several publications in areas of Indian macroeconomics, monetary policy, public finance, financial sector, international trade, and regulatory economics.
Mr Patel has a PhD in Economics from Yale University, an M Phil from University of Oxford and a BSc from the University of London.
After the massive bank fraud involving the Punjab National Bank (PNB) came to light, Mr Patel had famously said that like the "Neelakantha", the central bank will consume poison and face brickbats, but will persist with endeavours to become better with each trial. "We at the Reserve Bank of India also feel the anger, hurt and pain at the banking sector frauds and irregularities," he said.