RBI Report: Liquidity Management Framework

Description

The Reserve Bank of India’s “Report of the Internal Working Group to Review the Liquidity Management Framework” (July 2025) presents a detailed evaluation of India’s liquidity management system.

Chaired by Dr. Poonam Gupta, the Group examined the effectiveness of the existing framework, especially the role of the Weighted Average Call Rate (WACR) as the operating target for monetary policy.

The report recommends continuing WACR as the anchor rate, retaining the symmetric corridor system, and optimizing the variable rate repo/reverse repo operations. It also assesses participation in the call, triparty, and market repo segments, and provides insights into managing systemic liquidity amid changing macroeconomic conditions.

By aligning liquidity tools with evolving payment systems and market realities, the report aims to strengthen monetary transmission, enhance transparency, and ensure financial stability in India’s dynamic financial landscape.