Overview

• The Internal Working Group led by Deputy Governor Poonam Gupta recommends retaining the overnight weighted average call rate as the operating target despite the call market’s shrinkage to 2% of overnight volumes
• Transient liquidity management would shift to seven-day variable-rate repo auctions and shorter tenors to better address intraday volatility in a 24×7 payments environment
• The report endorses the existing symmetric corridor around the policy repo rate, with standing deposit and marginal standing facility rates set 25 basis points below and above, respectively
• Existing durable liquidity instruments—including open market operations, long-term VRR/VRRR auctions and FX swap auctions—are judged sufficient, with no changes proposed
• The RBI has opened the report for public and market participant feedback through August 29, with comments to guide the final design of India’s revised liquidity framework