Y Venugopal Reddy, executive director in the International Monetary Fund, is tipped to take over as the next governor of the Reserve Bank of India.

According to official sources, Reddy, 60, was preferred over Vijay Kelkar, adviser to the finance minister, and S Narayan, secretary in the Prime Minister's Office, in a meeting chaired by the Prime Minister on Tuesday night.

Deputy Prime Minister LK Advani, Finance Minister Jaswant Singh and BJP President Venkaiah Naidu were also present in the meeting.

The sources said Reddy's formal appointment order would be issued soon.

The need to decide on a new RBI governor arose because the government plans to nominate RBI Governor Bimal Jalan to the Rajya Sabha within the next two months. Jalan's term, otherwise, expires in October 2004.

Reddy had moved to IMF last July after serving as deputy governor in the Reserve Bank of India for six years.

With Reddy's premature return to India as RBI governor, the government will have to find his replacement in the IMF.

Narayan may be considered for the post, the sources added. Kelkar had returned to India after completing a three-year stint as executive director in the IMF.