Reserve Bank of India (RBI) governor D Subbarao has decided to "move on" and a hunt for his successor is underway, the country's finance minister P Chidambaram was quoted as saying on Wednesday.
Subbarao's five-year term ends on September 4, but there had been media speculation that he may receive an extension.
"Dr Subbarao had met me a few weeks ago and said he would like to move on and he would not like to be considered for another term," the finance minister told the Economic Times newspaper.
"I accepted, so now we are in search mode," Chidambaram said.
Subbarao had indicated that he wanted to leave on time in September, but media speculated that the Congress-led government would prefer not to make changes until after national elections due in May.
The RBI has been in crisis management mode in recent weeks, as it attempts to steady the ailing local currency, which hit a record low against the dollar this month.
The bank is also under pressure from business to cut interest rates to spur economic growth, which is running at a decade low of 5 %.
Subbarao issued his last monetary policy statement as governor on Tuesday, when he held interest rates steady as the bank focuses on trying to keep the rupee stable rather than pushing for growth.
The bank also lowered India's growth forecast from 5.7 % to 5.5 %, as the government struggles to kickstart the economy.
Subbarao, 63, an economist and civil official, was appointed RBI head in 2008 during the global financial crisis. He was given a two-year extension in September 2011.
Under his watch India's economy has gone through a tough phase, hit by decade-low growth, high inflation, a record low for the Indian currency and a steep current account deficit.
An independent thinker, Subbarao, in recent years has faced criticism from business leaders and the government for not easing monetary policy to spur growth.
The government's chief economic advisor, Raghuram Rajan, India's economic affairs secretary Arvind Mayaram and Planning Commission member Saumitra Chaudhary are contenders to succeed Subbarao, the newspaper said.