The banking circle has interpreted the move as a prelude to Reddy's return to the North Block as the finance secretary replacing Montek Singh Ahluwalia. Before joining the central bank as a deputy governor, Reddy was secretary, banking division, in the ministry of finance.

RBI insiders, however, said Reddy has been too busy with his desk work and expressed his desire to get out of the SBI board sometime ago.

Jagdish Capoor, another RBI deputy governor, joined the SBI board.

Capoor attended the SBI board meeting on Thursday at which the bank took the decision to cut its prime lending rate (PLR) following the one percentage point cut in bank rate and repo rate on April 29.

Incidentally, Reddy was present at the last SBI board meeting in early April which was specially convened to decide on a lending rate cut in early April. Reddy was the RBI nominee on the SBI board under Section 19 (f) ofthe SBI Act 1955. The current banking secretary CM Vasudev is also on the SBI board as a nominee of the centre under Section 29 (e) of the act.

According to sources in RBI, Andhra Pradesh chief ministry Chandrababu Naidu wanted Reddy as the chief secretary of the southern state.

Former Reserve Bank governor and the current governor of Andhra Pradesh C Rangarajan was also keen on Reddy's taking over as the chief secretary. However, the Reserve Bank deputy governor, an IAS officer of the AP cadre, has declined the offer.

Reserve Bank insiders feel Reddy will continue to be the deputy governor and not shift to the North Block. Revenue secretary NK Singh, a 1964 IAS officer, may ultimately step in Ahluwalia's shoes.

Ahluwalia, who has survived both Manmohan Singh and P Chidambaram -- two former finance ministers -- is likely to be appointed as member secretary, Planning Commission, sources in the Bharatiya Janata Party (BJP) said.

Prior to taking over as RBI governor in November last year, Bimal Jalanwas member secretary, Planning Commission. Rangarjan, who had received two one-year extensions after his full term as the Reserve Bank governor, left one month ahead of the expiry of his second term on November 21.