Reserve Bank of India governor Subbarao gets two-year extension

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The government on Tuesday approved the extension of Reserve Bank of India (RBI) Governor D. Subbarao's tenure by two years, which officials said could be because of the need to maintain stability at the central bank amid global economic turmoil.

"The Prime Minister has approved the extension of the term of Dr. D. Subbarao as Governor of the Reserve Bank of India for a further period of two years with effect from September 5, 2011 up to September 4, 2013," said a statement from the Prime Minister's Office.

Subbarao has been at the helm of the central bank right from the onset of the previous global financial crisis in 2008, which resulted in a slowdown in the Indian economy in 2008.

The RBI had received praise from other global central banks for the way it handled monetary policy during that period.

But the RBI Governor along with other policymakers has been battling high inflation for close to two years now, which saw the central bank raising key interest rates 11 times since January 2010.

He now faces another challenge with financial markets in a crisis triggered by the downgrade of US sovereign debt rating by global rating agency Standard and Poor's.