Review of liquidity management framework could boost transmission
A rethink is needed on the objective of keeping the operational rate aligned to the policy repo rate, say industry players
In a bid to simplify the liquidity management framework, the RBI on Thursday announced the setting up of an Internal Working Group to come up with suggestions. This move has been received with great optimism by bankers, and not without reason.
With liquidity hampering transmission of policy rate actions, ironing out complexities in the existing framework is imperative.
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