Although the rupee has recovered after yesterday's announcement by Subbarao on the possibility of selling dollars directly to oil companies, it had fallen to 56.07 to a dollar in the morning trade, after yesterday's close of 55.65.
The meeting, according to sources, was also attended by Chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan, who had favoured direct sale of dollars to oil marketing companies (OMCs) to ease pressure on the rupee. The oil firms buy dollars in large quantities to import crude from the international market.
India's crude oil import bill was USD 155.6 billion in 2011-12. In the mid-session, meanwhile, the rupee was trading 26 paise higher at 55.39 on fresh selling of dollars by banks and exporters.
Subbarao had also hinted at the possibility of issuance of overseas sovereign bonds to tide over the worsening balance of payment situation.
"RBI will do whatever is necessary. Some structural changes are necessary for improvement in the current account. Meanwhile, the RBI is monitoring the situation and we will do whatever is necessary, consistent with our policy," he had said yesterday after meeting of the central board of RBI in Mussoorie.
On the issue of direct sale of foreign exchange to oil marketing companies, he had said that the issue was on the table.
"I am not ruling it out. I am also not saying that we are going to do it right now. It's an open issue. We have done it in the past. At the moment, we have not done it so far," he had said.
As regards the sovereign bonds, RBI chief had said, "I cannot say in favour or out of favour. We have done it in the past, it might be done in the future... but it's not something that is being contemplated right now."
India in the past had raised funds from overseas markets from issues like Resurgent India Bonds to deal with the balance of payment problems.
Since March 1, rupee has nearly lost over 13 per cent and 11 per cent since the presentation of Budget on March 16 in the face of withdrawal of funds by foreign investors from stock markets.
The Budget contained proposals like retrospective taxation and general anti-avoidance rules (GAAR) which impacted foreign portfolio investment.
Another import reason for weakening of rupee was the rising current account deficit, which is the difference between inflow and outflow of foreign exchange.
It rose to 4 per cent of GDP at the end of December 2011, as against 3.3 per cent during 2010-11.