Reserve Bank of India [Get Quote] governor D Subbarao met acting finance minister Pranab Mukherjee on Sunday night to brief him on the economic situation and assured him of appropriate policy action, if necessary.

"The governor briefed the finance minister on the evolution of the global financial crisis, outlook for the global economy and the response of advanced and emerging economies to the crisis, based on his meetings with other central bank governors in Basel and Kuala Lumpur in January and February, respectively," RBI said in a statement today.

"The governor assured the finance minister that the central bank is constantly monitoring the situation and will take appropriate policy action, as necessary," it added.

The meeting comes days after the finance minister told Parliament that he would discuss the possibility of further fiscal and monetary measures to revive economic growth, which is projected to fall to 7.1 per cent this year, as against 9 per cent or more in the last three years.

The Central Statistical Organisation is due to release the third-quarter gross domestic product estimates by the end of the week. RBI is expected to announce more measures after the data is released.

Last week, Subbarao said in Tokyo that there was room to lower interest rates further. He had also noted that the industrial output has shrunk, exports and service sectors have been hit and investment demand has decelarated.

To revive economic growth, RBI has already announced a host of measures, which would release over Rs 3,88,000 crore (Rs 3,880 billion) into the system.

The market is expecting the central bank to lower the repo rate -- or the rate at which it lends to banks -- by up to 100 basis points over the next few weeks.

Since October, RBI has lowered the repo rate by 350 basis points, while the reverse repo rate, or the rate at which banks park surplus funds with the central bank has been reduced by 200 basis points.

In addition, the cash reserve ratio, or the proportion of deposits that banks set aside has been reduced by 400 basis points, resulting in an injection of Rs 1,60,000 crore (Rs 1,600 billion) into the system. Private and foreign banks have, however, responded by lowering lending rates by around 50 basis points, while public-sector banks have cut their benchmark prime lending rates by 150-200 basis points.

Both the government and RBI have been prodding banks to pare rates further to boost economic activity.