NEW DELHI • India has appointed former bureaucrat Shaktikanta Das to head the nation's central bank, after Mr Urjit Patel resigned unexpectedly after clashing with the government over the institution's autonomy.

Mr Das, who often sought cuts in interest rates as the top bureaucrat in the finance ministry, was appointed for a three-year term, making him the 25th governor of the 83-year-old Reserve Bank of India (RBI), a government statement said yesterday.

The new governor has choices to make: whether to let Prime Minister Narendra Modi's government have a tighter supervision of its functioning and extract more capital from the central bank to meet the budget deficit, or defend the institution's independence.

Mr Modi's administration also wants the RBI to loosen curbs on some of the weakest banks to ensure lending continues and economic growth gets a boost.

A former economic affairs secretary from 2015 to 2017, Mr Das worked closely with the central bank and oversaw the demonetisation exercise in late 2016. He is currently a member of the Finance Commission of India, and the government's representative at the Group of 20 summits.

Mr Modi initially brought Mr Das into the finance ministry to head the revenue department, later moving him to economic affairs, where he oversaw the controversial cash ban move.

Besides, the government wants liquidity taps to be opened for the crisis-ridden shadow banking sector, which has been making at least three out of 10 fresh loans in the past few years.

BLOOMBERG