India's finance ministry wants the Reserve Bank of India to set up a fund to buy out stressed assets of the country's top 25 shadow lenders, a government source told reporters on Thursday.

The government has also asked the central bank to consider a one time waiver to banks from classifying some real estate loans as bad loans, the government official, who declined to be named, said.

However, the RBI has opposed the idea of opening its balance sheet to buy toxic assets of the non-banking finance companies, the official said, adding discussions were ongoing.