- Shaktikanta Das has been appointed for a term of three years
- Mr Das succeeds Urjit Patel who announced his shock exit on Monday
- Shaktikanta Das retired as the Economic Affairs Secretary in May 2017
Here are 10 things to know about this big story:
"The Appointments Committee of the Cabinet has approved the appointment of Shaktikanta Das, former Secretary, Department of Economic Affairs, as Governor of the Reserve Bank of India (RBI) for a period of three years," news agency Indo-Asian News Service (IANS) reported an official order as saying.
Mr Das, a former secretary at the department of economic affairs, was appointed the governor for a period of three years. He retired as the Economic Affairs Secretary in May 2017.
He is a 1980 batch IAS officer from Tamil Nadu cadre.
Mr Das is known for being an experienced bureaucrat who has held key positions both under the ruling Bharatiya Janata Party as well the previous Indian National Congress-led government, reported news agency Reuters.
His appointment is likely to cheer markets as investors expect communication between the government and the central bank to improve following a public spat that deepened an existing rift between the two sides, said experts.
"Bonds and rupee should react positively following this news," said Ashish Vaidya, executive director and head of trading at DBS Bank.
Mr Patel resigned after a power tussle with the government wherein the Centre sought a part of RBI's excess reserves ahead of the general elections next year.
The last meeting of the RBI Board had ended on a conciliatory note, with the central bank agreeing to set up a panel on sharing surplus reserves and restructure loans of small businesses up to Rs. 25 crore.
However, various reports had said that the friction between the RBI and the government would re-surface at Friday's meeting. The government's nominees on RBI Board had also been putting pressure on the central bank to allow some bad-debt-laden public sector banks to lend more easily.
Tensions between the RBI and the Centre had become public last month when Deputy Governor Viral Acharya, giving an example of the Argentinian government's interference in the central bank's policies, said that undermining the top lender's authority was "potentially catastrophic". (With agencies inputs)