Disagreeing with IMF's assessment of India's financial sector, the Reserve Bank today said the

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government does not interfere with the working of regulators and the country's banks cannot follow international group exposure norms as it would hamper economic growth.

The financial sector regulators do not enjoy de jure status in India but their "de facto position too reveals no interference in the functioning of regulators" by the government, Reserve Bank said in its comments on the IMF's Financial Stability Report on India.

The IMF report said that the financial sector regulators in India "lack of de jure independence, which can be rendered more challenging by the intricate relationship with state- owned supervised entities and their business decisions".

RBI, however, added that IMF's suggestion "merits consideration" as the regulators have to function within the framework of policies framed by the government.

The apex bank said that the government had set up a Financial Sector Legislative Reforms Commission (FSLRC) to suggest steps to streamline and further strengthen the statutory framework comprising an array of statutes enacted since 1930s. The FSLRC is expected to give its report by March 2013.

Moreover, the RBI said steps were underway to accord a statutory basis to the pensions regulator.

With regard to IMF's observation on large exposure limits, RBI said it was not possible to follow the international norms with regard to group borrower limit as it would hamper the growth of economy.

The IMF report said that the Indian economy faces near-term risks of worsening bank asset quality and pressures on systemic liquidity.