Yaga Venugopal Reddy takes over as the Reserve Bank of India governor on Saturday.

He will be the 21st governor since Sir Osborne A Smith, who was the first signatory on the parchment scroll on April 1, 1935.

All RBI governors go through this ceremonial signing of the scroll a proxy for oath-taking on the day they join office.

Reddy is possibly the first RBI governor to have been given a five-year stint from the beginning. Like C Rangarajan, Reddy is also an "insider" a former deputy governor elevated to the top post.

Both Rangarajan and Reddy had a stint outside the central bank before taking over the helm Rangarajan at the Planning Commission and Reddy at the International Monetary Fund.

Also Read Just what does the RBI governor do?

For the 1964 batch Indian Administrative Service officer, it will be sort of a home coming. Reddy stepped out of RBI on July 31 last year to join the IMF after a six-year stint as a deputy governor.

RBI insiders feel "continuity" will be the key to Reddy's policies even though Reddy and his predecessor Bimal Jalan are as different as chalk and cheese.

"Jalan has been a risk-taker and unconventional in his approach. Reddy is methodical and a shrewd strategist," says an RBI executive who has watched both Jalan and Reddy from close quarters."

"The financial markets know Reddy as the man who talked the rupee lower with his famous August 15, 1997 Goa speech where he said: "As per the real effective exchange rate, it will certainly appear that the rupee is over-valued irrespective of the base chosen."

An equally famous Reddy-ism pertains to the relationship between the government and the Reserve Bank "the joint family approach which goes against the spirit of corporate governance."

Once Reddy said that this "joint family approach needs to be ended with friendly but amicable partition of assets, liabilities and activities."

The industry expects Reddy to address the structural issues on a war footing.

This can be done by transferring the RBI stake in the State Bank of India back to the government and withdrawing all RBI nominees from bank boards, to start with.

Reddy is also the architect of the 'liquidity corridor' created through the introduction of the liquidity adjustment facility.

Besides, he was instrumental in reviving the defunct repo as a money market tool for liquidity management.

The market also expects Reddy to encourage self regulatory organisations such as the Indian Banks Association, Foreign Exchange Dealers Association of India, Primary Dealers Association of India and Fixed Income Money Market Dealers Association of India in the financial system to play a greater role.

"Reddy is traditionally known as a nuts-n-bolts man but he is one who never loses sight of the big picture," says a senior banker.

Reddy's greatest strength is his independence. Those who know him well say he does not soft-peddle issues.

"He is inflexible in a positive sense of term because he does not compromise on issues. Since he knows the system, people and the psyche of the market well, he can start from day one," quips another finance professional. No wonder, the market is waiting for him with bated breath.