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RBI Eyes Secured Overnight Rate as Policy Benchmark

15 July 20251 min read
ECONOMYRBI Eyes SecuredOvernight Rate asPolicy Benchmark15 July 2025safalsetu.com

Why in the news

The RBI is reportedly preparing to anchor policy transmission on a secured rate rather than the unsecured call rate.

Key facts

  • Candidates: TREPS or the new SORR (Secured Overnight Rupee Rate).
  • Banks want a fixed-rate daily repo instead of 14-day VRRR auctions, to suit 24×7 banking.
  • CRR cut aims to add durable liquidity.

Expected impact

  • Better transmission to money markets and banks.
  • Steadier short-term rates and stronger policy credibility.

Exam angle

  • Present benchmark: WACR.
  • New secured rate: SORR.

Test yourself

1. Which unsecured rate has been RBI's operating benchmark so far, as per the reports?

The shift is from unsecured WACR to a secured rate.

2. What share of overnight market volumes do secured rates TREPS and SORR represent?

They represent over 98% of overnight volumes.

3. What size of CRR cut was being considered from September 2025?

A possible 100 bps CRR cut was under consideration.