Reserve bank of India (RBI) Governor D Subbarao on Thursday supported Finance Minister P Chidambaram's call to lender to cut interest rates to provide a much-needed boost to economic growth.

Mr. Subbarao said that the RBI was very conscious of the need to be supportive of the country's economic growth.

He noted that the central bank cut repo rate - the rate at which the central bank lends money to banks - several times this year, but many banks did not pass on the cuts to consumers and businesses.

Speaking on the topic, he added, "When the RBI calibrates its short-term policy interest rate, the expectation is the monetary transmission will take place and the banks should respond by calibrating the lending rates. Some banks have responded, some have not."

So far this year, the central bank has cut repo rate for banks by 75 basis points (bps).

Mr. Subbarao's comments emerged just a day after Mr. Chidambaram's call to banks to cut minimum or base lending rate in line with periodic interest rate cuts being made by the central bank.

The RBI chief also raised concern over the country's soaring current account deficit (CAD), saying there was a great need to take steps to reduce CAD to sustainable levels of 2.5 per cent of the GDP. Last year, CAD jumped to 4.8 per cent of the country's GDP.