RBI will draw up a weighted AVG call speed at REPO speed by ensuring an optimal system liquidity: revised LMF

In order to reduce the uncertainty in the market about the tenor, quantum and timing of the repo/reverse repo activities, RBI said that it will sufficiently inform the market participants

The Reserve Bank of India (RBI) will try to tailor the weighted average call rate (WACR) to the policy repet rate by ensuring an optimal level of system liquidity, according to the revised liquidity management framework (LMF).

To this end, the Central Bank will use the instruments such as Open Market Operations (OMOS), long -term variable Rate (VRR)/ Variable Rate Repo (VRRR) activities (VRRR) activities and SWAP auctions of the Valuta (FX).

WACR is the target rate for the RBI liquidity activities. It is the operational target of monetary policy. The objective of the Central Bank’s liquidity management activities is to coordinate the target interest rate at the policy repo rate.

In his revised LMF, the RBI emphasized that the overnight stay will remain the operational target of monetary policy. However, it will keep track of the rates in other segments about the Night Geldmarkt to guarantee the orderly evolution of the money market rates and the smooth transfer.

The LMF has retained the existing symmetric corridor system, with policy repo rate (currently at 5.50 per cent) at the middle of the corridor and standing deposit facility (sdf rate: 5.25 per cent) and marginal standing facility (on 555 boss: 755.75 base: 555 55.75), Whichs Point: 75555555555 555555555 55555555555555555555555555555555555555555555555555555555555555555555555555555555555555 Side of the policy repo rate, acting as the lower bound (floor) and upper bound (ceiling) of the corridor, respectively.

“The 14-day variable speed repo (VRR)/ variable rate of reverse repo (VRRR) processing will be stopped as the most important processing for managing short-term/ temporary liquidity.

“Instead, the same is mainly managed by 7-day VRRR and other VRR/ VRRR activities from Tenors from overnight to 14 days, according to the reserve Bank based on its assessment of the requirement of the Liquidity system,” according to the LMF.

In order to reduce the uncertainty in the market about the tenor, quantum and timing of the repo/reverse repo activities, RBI said that the at least one day will offer sufficient prior notice to market participants, while such liquidity operation is carried out.

However, if circumstances justify, the reserve Bank would carry out activities by announcing on the same day.

RBI said that independent primary dealers (SPDs) will have access to SDF, reversed repo operations at night and all repo operations, regardless of their tenor.

Published on September 30, 2025