He will be the first bureaucrat to head the central bank in almost five years.
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The Indian currency had hit record low of 57.32 against a dollar in June last year.
Political funding of elections has led to the rise in black money in the economy.
RBI intervenes in the foreign exchange market to manage volatility and to prevent disruptions to the macroeconomic situations.
The Financial Stability and Development Council members include heads of regulatory bodies like RBI, Sebi and Insurance Regulatory Development Authority.
Rajan said that while there were talks about Jan Dhan, it was difficult to target transfers to people through this tool. Jan Dhan, he said, does not really work as advertised.
Subbarao said he would be "ok" if a sovereign bond issue in foreign currency is done once just to test the waters, but cautioned against using the instrument regularly.
'I am sure Dr Patra will get the fullest cooperation from the finance minister who needs workhorses, not prima donnas constantly looking to improve their CVs,' says T C A Srinivasa-Raghavan.
Former Reserve Bank Governors do not seen any harm in central bank consulting the government before firming up monetary policy initiatives saying such an step would not amount to infringement on its independence.
In order to contain Current Account Deficit and arrest value of declining rupee, the RBI last month had raised the cost of borrowing for banks and reduced availability of funds to curb speculation in the forex market.
Lauding the pro-reforms approach adopted by Reserve Bank of India Governor Raghuram Rajan, industry body Confederation of Indian Industry on Thursday expressed the hope that the central bank would shift towards an expansionary monetary policy by cutting interest rates to stimulate growth.
Subbarao said, short-term as well as medium-term prospects or Indian economy continue to be grim. Fiscal deficit is going to be much higher, the debt burden much larger and the financial sector will be in a worse shape.
'Three external members of the first MPC are respected researchers with excellent academic background, but there is no harm in considering academicians with diverse backgrounds such as finance and labour along with economists for this body,' recommends Tamal Bandyopadhyay.
Gokarn was the first Indian central banker who regularised warnings to the government, through the monetary policy statement, on the need to reduce fiscal deficit.
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Currently, the cash reserve ratio is pegged at a low of 4 per cent, while statutory liquidity ratio that includes securities such as government bonds, stands at 23 per cent, down from 25 per cent in 2010.
The term of Subbarao as RBI chief ends on September 4, while the next mid-quarter policy review is due on September 18.
The central bank's move comes against the backdrop of the government efforts to crackdown on entities, that are illegally raising large amounts of money from the public.
The G-20 meeting of the Finance Ministers and central bank governors beginning July 19 will also be attended by RBI Governor D Subbarao and Deputy Governor Urjit Patel.
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India's trade deficit widened to $20.1 billion in May because of high gold imports while exports declined by over a per cent, raising concerns about economic recovery.
The Reserve Bank on Monday pitched for creation of a conducive environment for investment and faster clearances of projects to boost economic growth which slowed to a decade low of 5 per cent in the previous fiscal.
The dollar index was up by 0.43 per cent against a basket of six major currencies as euro dropped against the dollar, after quarterly economic reports from France and Germany missed expectations, said analysts.
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
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The document said potential growth, which hovered at 8-8.5 per cent levels in the period from the second quarter of 2005-06 to the second quarter of 2008-09, has gone down to 6 per cent.
'We get to know secrets such as some of India's top-rated firms do not always make payments when due and many State-owned, listed, enterprises that borrow in bond markets default regularly.' 'Without naming the bank, he says that ever-greening of poor loans by a part of India's shadow banking lay at the doorstep of India's banking, notably 'one private bank'.' Viral Acharya's Quest for Restoring Financial Stability in India won't be music to many ears, observes Tamal Bandyopadhyay.
Experts point to the bitter experience of countries including Mexico, Thailand, South Korea and Russia and desist from going forward with plans of issuance of such securities. They say rather than going abroad, the country should increase participation of foreign investor in the government securities which does not have any forex risk.
Some accounts can be revived by rescheduling loans, which the RBI envisages to do once the norms get finalised after the public discussion.
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Chidambaram said recent measures taken by the Reserve Bank of India were aimed at reducing volatility in the financial market, where the rupee has dropped to record lows.
On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 per cent and restricting access by way of repos to Rs 75,000 crore (Rs 750 billion).
The stronger than expected monsoon has not yet softened food inflation as much as it should have and in particular, vegetable prices have been impacted by weather-driven supply disruptions, said RBI Governor D Subbarao while unveiling the first quarter monetary policy review.
Amidst bankers and industry crying foul over RBI's move to squeeze liquidity, Reserve Bank Governor D Subbarao on Friday met Finance Minister P Chidambaram ahead of first quarter policy review next week.
Chidambaram has been magnanimous in endorsing my book, says the former RBI Governor D Subbarao.
Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.
RBI is scheduled to announce mid-quarter review of monetary policy for 2013-14 on June 17.
RBI Governor Raghuram Rajan plans to write on 'academic issues' after leaving the Reserve Bank.
'One of the nice things about being a central bank governor is that the markets hang on every word you say'.
"I would hope that the government would very respectfully request him to continue for one term or my preference would be two terms," Narayana Murthy said.
Market participants are impressed that Rajan has set the ball rolling on his first day at RBI with a series of announcements, raising expectations that more are in store.
Hailing the announcement of Raghuram G Rajan as the new RBI Governor, India Inc on Tuesday said the appointment of the former IMF Chief Economist will help bring the economy back on growth path.
Following the meeting, Subbarao said the central bank will look into the latest inflation numbers before coming out with the monetary policy review.
Going by its past experience of differences between the central bank and the finance ministry, the government might prefer a person who could bridge this gap.
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