The government on Thursday asked the Reserve Bank of India (RBI) to relax the provisioning and capital norms for banks after the central bank continued to hold its stance that the February 12 circular cannot be relaxed exclusively for the stressed sector assets.

RBI deputy governor Viral Acharya and NS Vishwanathan, department of financial services secretary, department of economic affairs secretary and finance secretary discussed the impact on banks under Prompt Corrective Action (PCA) with the central bank.

The circular requires banks to finalise a resolution plan in case of a default on large accounts of Rs 2,000 crore and above within 180 days, failing which insolvency proceedings will have to be invoked against the defaulter.