RBI likely to use 'secured rate' as new operative benchmark tool
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Mumbai: The Reserve Bank of India may consider replacing the unsecured weighted average call rate (WACR) with a secured rate-such as the tri-party repo dealing system (TREPS) rate or the newly introduced secured overnight rupee rate (SORR)-as the operational rate for effective monetary policy transmission, suggested Japanese brokerage firm Nomura. This shift would better reflect short-term funding conditions and align India's framework with global best practices, it said in a report. While the call money market has seen stagnant volumes of around ₹12,000 crore daily, the secured repo markets have grown substantially. TREPS, for instance, now handles an average volume of ₹3-4 lakh crore in daily transactions. Nomura argues that a secured rate would better represent short-term funding conditions. It also notes that such a shift would require more active liquidity management by the RBI, especially since mutual funds-major lenders in secu...