Kumar Mangalam Birla, the chairman of the Board of Governors of the Indian Institute of Management (IIM), Ahmedabad, has accepted Mr Nanda's resignation and requested him to continue till September to facilitate a smooth transition.
Mr Nanda, a 1983-batch alumnus of IIM Ahmedabad, took charge of the top post in September 2013 and his tenure was slated to end next year.
He had quit his post at Harvard Law School to return to India and his alma mater, after more than 20 years.
"When I joined, I had committed to serve the term. On September 1, it will be four years, since I took charge.
"It is a good time to step aside and to hand over the responsibility and honour of leading the institute to the next, fortunate person. I will hand over the responsibilities of the director at the end of that day," Mr Nanda said in a letter to the IIM-A community.
"Professionally, I have enjoyed the experience immensely and I have learnt a lot. However, personally, living a long long distance from my wife and son has been a challenge," he added.
Mr Birla, the chairman of the Aditya Birla Group, thanked Mr Nanda for leading the institute for three-and-a-half years.
"I have received your resignation dated April 26. We have had a conversation about this for the past couple of weeks, and I fully understand your need to be with family and the inconvenience that the separation is causing you. Hence, I accept your resignation, albeit with regret," said Mr Birla in his letter to Mr Nanda today.
Mr Nanda, a gold medallist both from IIT Delhi and IIM Ahmedabad, completed his MA in Economics and PhD from Harvard University and has been teaching courses in Harvard Business School and Harvard Law School.