Y V Reddy will take over as Reserve Bank of India governor on Saturday.
The current RBI governor, Bimal Jalan, who has been nominated to the Rajya Sabha, will demit office on that day.
Jalan was earlier slated to pass the baton to Reddy after the International Monetary Fund-World Bank meeting at the end of September or early in October.
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However, he decided to advance the date of his departure in the best tradition of corporate governance as the government has already notified his nomination to the Rajya Sabha.
Since the notification was issued on August 27, Jalan steered clear of signing any file at the Reserve Bank.
After the notification was issued, the RBI consulted Attorney-General Soli Sorabjee on whether Jalan could continue in office after the announcement of his nomination.
The attorney-general was reportedly of the opinion that the government should clarify the date of demiting office.
Accordingly, it was decided that the government would issue a corrigendum to the notification.
However, according to RBI sources, Jalan was not comfortable with the idea and he wanted to demit office at the earliest.
The outgoing governor met President APJ Abdul Kalam and Vice-President BS Shekhawat over the last two days in Delhi and discussed the issue with them.
With Jalan demiting office, Reddy is expected to lead the Indian delegation at the Fund-Bank meeting this month. Finance Minister Jaswant Singh will not attend the meeting.
Reddy, who has been an executive director at the International Monetary Fund (IMF) since last August, will have a five-year stint as governor. Before his IMF assignment, Reddy spent six years with the RBI as a deputy governor.
Jalan became RBI governor in September 1997. After completing five years, he got another two-year extension. In the normal course his term would have come to an end next year. He is one of the longest serving RBI governors.