The Centre has appointed Sanjay Malhotra, the revenue secretary, as the 26th governor of the Reserve Bank of India in place of Shaktikanta Das, whose term ends Tuesday.

A 1990-batch IAS, Malhotra's three-year term commences December 11.

In Malhotra, the Narendra Modi-government has once again sent a civil servant to Mint Street. Das was also an IAS and had retired as the economic affairs secretary from the finance ministry. He had assumed charge as the 25th Governor of RBI on December 12, 2018 for three years and got a three-year extension in 2021.

Ahead of Malhotra’s appointment, the buzz was that Das would get another extension of at least a year.

Das had met finance minister Nirmala Sitharaman on Saturday, and the meeting reportedly lasted 30 minutes. This was one day after the RBI kept the repo rate unchanged in its monetary policy, but lowered the cash reserve ratio (CRR) which will infuse liquidity in the banking system to the tune of ₹1.16 lakh crore.

Malhotra is an engineering graduate in Computer Science from IIT Kanpur and has a Master's in Public Policy from the Princeton University.

Observers said the new governor is likely to have cordial relations with the Centre and FM Sitharaman as he is from the North Block.

Shilan Shah, deputy chief emerging markets economist, CapitalEconomics, said the appointment comes as a surprise since it was widely assumed Das would get a year's extension.

``The appointment of Malhotra could set a new direction for the RBI. Admittedly, at this very early stage not much is known about his monetary policy views. But in comments last week, he did voice considerably more concern over the health of the economy than Das did during Friday’s policy announcement," Shah said.

"Perhaps more instructive, Das was the most hawkish member of the MPC. With Das leaving, the balance of views on the MPC is likely to be less hawkish.’’

Shah said that under Das, the forecast was that cuts to the repo rate would only begin in April. But Malhotra’s appointment could see the first 25 basis points cut happening in his first meeting in charge in February. He does not rule out the possibility of an unscheduled meeting before the February deliberations.

In what could indicate his potential dovishness, Malhotra while addressing the 67th foundation day of the Directorate of Revenue Intelligence (DRI) on December 4, had reportedly said, "we are here not only for revenue, we are here for the whole economy, so if in the process of garnering some small revenue, we are hurting the whole industry or the, it is certainly not the intent’’.

"Revenue comes in only when there is some income, so we have to be very cautious so that we do not in the process, as they say, kill the golden goose."