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Liquidity management framework
August 27 , 2025
16 hrs 0 min
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- The RBI's Internal Working Group (IWG) proposed discontinuing the 14-day variable rate repo as the main liquidity tool.
- They suggested using weekly operations and fine-tuning instruments for better flexibility.
- The weighted average call rate (WACR) will remain the operating target.
- Reserve requirements and averaging help manage rate volatility, but banks underutilise them.
- Lowering daily reserve minimums could improve liquidity usage and reduce costs.
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