Here's why the standoff between the govt and RBI could escalate further

Last year, the RBI parted with Rs 100 billion ($1.38 billion) more as an interim dividend

India’s government is asking the central bank to hand over a part of its surplus reserves and loosen liquidity norms for lenders -- demands that are likely to escalate a standoff with the monetary authority that’s fiercely protective of its independence.

The matter is pending before the board of the Reserve Bank of India and may be taken up at its next meeting likely on Nov. 19, a government official told reporters in New Delhi, asking not to be identified citing rules. The norms for sharing excess capital reserves should be set in line with established global practices, the official added.

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