Rajan says backs removing RBI debt powers

NEW DELHI (Reuters) - Reserve Bank of India (RBI) governor, Raghuram Rajan, cautiously backed a government plan on Sunday to hand over public debt management to a new agency, as the two sides played down reports of friction over the biggest regulatory shakeup in a generation.

"A public debt management agency as a professional organisation, independent of the (central) bank, independent of the government, is something that is desirable," Rajan told a joint news conference with Finance Minister Arun Jaitley.

However, Rajan emphasized that details of how the new agency would operate still have to be worked out.

"Besides time and the nature of resources it uses, how it works with the central bank and with the government, those are all details that the government is working to fill out. Those are the things that have to be determined," Rajan said.

Jaitley denied any "disconnect" with the central bank over the changes proposed in the budget, which also include setting up a monetary policy committee.

He said all the changes had been proposed with the central bank before being included in legislation known as the finance bill, which is due to be voted on by parliament in April.

Finance ministry sources told Reuters earlier this week that officials at the Reserve Bank of India had reservations about the proposals.

(Reporting by Rajesh Kumar Singh; Writing by Frank Jack Daniel; Editing by Malini Menon and Paul Tait)