Claim settlement process set to become simpler

THE RESERVE BANK of India will continue with the weighted average call rate (WACR) as the operating target of the monetary policy, governor Sanjay Malhotra said while detailing the MPC outcome.

- FE BUREAU

Later in the day, the central bank issued the draft for public consultation, with no major changes from the current framework. The existing liquidity management framework was implemented in February 2020.

Malhotra said the internal working group has submitted the report and recommended to continue with WACR, citing multiple reasons. "The weighted average call rate (WACR) is found to be highly correlated with other overnight money market rates (TREPS and market repo) in the collateralized segments. Further, WACR is also found to be effective in transmitting signals to other money market instruments across maturities," Malhotra said.

The working group has pointed out that the RBI has the maximum lever over WACR than other overnight rates as the segment only contains RBI's regulated entities.