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The government has narrowed down the list of candidates for the next Governor of the Reserve Bank of India to four , a senior government official has said.

A new Monetary Policy Committee (MPC) also would soon be chosen, the official said.

The moves seek to ensure policy continuity after RBI chief Raghuram Rajan shocked markets 10 days ago by announcing that he would not seek reappointment in September.

The failure of negotiations on his possible return had sparked fears that Mr. Rajan’s departure could put at risk the inflation-targeting central banker’s gains in stabilising Asia’s third-largest economy over the past three years.

Sending a reassuring message to markets, the official said that the list of candidates to replace Mr. Rajan had been whittled down to four — three of them central bank veterans, with the other being the head of the country’s largest commercial bank.

The four are current RBI Deputy Governor Urjit Patel, former Deputy governors Rakesh Mohan and Subir Gokarn, and State Bank of India Chairperson Arundhati Bhattacharya.

Another official from the Prime Minister’s Office said that Mr. Rajan was expected to join the search committee formed to appoint three external members of the new six-member MPC of the RBI.

The objective was to ensure that the MPC is constituted as soon as possible, before the appointment of Mr. Rajan’s successor, both officials said, speaking on condition of anonymity due to the sensitivity of the matter.

“We are very hopeful that the present governor will be a member of this search committee,” the first official said, adding that if all goes well the new panel would be formed by August 1.

If that timetable holds, it would mean that the MPC is in place in time for the last bi-monthly policy meeting that Mr. Rajan is expected to chair in early August.

The RBI held rates earlier this month after an uptick in consumer price inflation, but maintained its easing bias, meaning it is more likely to reduce interest rates than to raise them in future.

Under the Finance Bill passed this year, three members of the MPC would be RBI insiders, headed by the Governor.

The three external members would be chosen by the search committee comprising Modi’s Cabinet Secretary, the RBI Governor, the secretary of the Finance Ministry’s Department of Economic Affairs and three outside experts chosen by the government.

The makeup of the MPC, which will assume the responsibility for setting the interest rates, was the result of a hard-fought compromise between the RBI and the Finance Ministry. The RBI Governor’s vote would be decisive in the event of a tie.