A six-member monetary policy committee (MPC) that will be given task of setting interest rates could be in place before August 9, when the next monetary policy announcement is due.
Selection committee headed by the cabinet secretary will pick the three nominees.
As per the report by ‘The Economic Times’, the committee will be chaired by the Reserve Bank of India (RBI).
Next RBI governor will be selected next month and is expected to join by August 1 in an "overlapping capacity", perhaps as officer on special duty (OSD), said another senior official.
Present governor Raghuram Rajan, whose three-year term ends in September, had also served as OSD in the last few weeks of predecessor D Subbarao's term.
As Rajan has been closely involved in conceiving the monetary policy committee, Centre wants it to become operational under him before a new governor takes over.
Framework for the monetary policy committee was cleared through an amendment to the RBI Act via Finance Bill 2016.