Monetary policy review: RBI adopts a new liquidity management framework

The central bank also withdrew daily fixed rate repo and four 14-day term repos every fortnight being conducted presently

The Reserve Bank of India (RBI) on Thursday adopted a new liquidity management framework in which there would be no fixed daily liquidity injection operations, but the central bank would act whenever the banking system requires money.

The weighted average call rate (WACR) will remain the operating target of the monetary policy, the RBI said, which means it will ensure enough liquidity to anchor the call rate at around the repo rate. Which means if the call rate inches above the repo rate, it would signal liquidity deficit and the central bank will bring its tools to infuse liquidity. Similarly, if